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Now that the holiday season is in full swing, the housing market typically slows down until the new year. This holiday housing market, however, might be a whole different world.

One reason for this is that mortgage rates have dropped again, averaging 7.29% for a 30-year fixed-rate home loan in the week ending Nov. 22. (The results include an adjustment for the observance of Thanksgiving.)

“In recent weeks, rates have dropped by half a percent,” said Sam Khater, Freddie Mac’s chief economist. However, “potential homebuyers continue to hold out for lower rates and more inventory. This dynamic is reflected in the latest data showing that existing-home sales have fallen to a 13-year low.”

Yet the latest housing statistics from Realtor.com® show a glimmer of hope coming down the pike: For the week ending Nov. 18, new listings shot up a whopping 5% compared with last year.

We’ll break down what this and other just-released real estate statistics mean for buyers and sellers in this latest installment of “How’s the Housing Market This Week?”

Why more homes are hitting the market

Housing inventory has been famously scarce in recent months, but in the past three weeks, there’s been an upward trend of new listings coming to market.

“With the number of homes for sale already limited, a pickup in new listings is a welcomed change to recent inventory woes,” notes Realtor.com economic research analyst Hannah Jones in her analysis.

In addition to this gush of fresh listings, the total number of active listings (both new and old) increased by 1.5% for the week ending Nov. 18 compared with a year earlier. This is the second week in a row that these numbers exceed last year’s levels.

Granted, Jones points out that, “from a longer-term macroeconomic perspective, housing remains undersupplied.”

Pull back to the big picture, and you might be shocked to know that the number of for-sale homes is currently 41.8% below pre-pandemic levels.

Still, more homes are slowly but surely coming—particularly since both housing starts and housing permits have been climbing month over month.

The latest trend in home prices

On the not-so-good news front? So far at least, home prices are still rising.

The nation’s median list price ticked up by 1.2% over last year’s levels for the week ending Nov. 18.

“Though prices have continued to climb over last year’s level, mortgage rates have fallen for the last three weeks, promising relief for buyers,” Jones points out.

As more homes come to market and ease supply issues, prices might soon settle down, too.

“More active inventory will take some pressure off of home prices,” Jones explains. “And falling home prices, coupled with falling mortgage rates, will help buyers trickle back into the housing market.”

Still, this “gift” is more of a consolation prize, at least at this point.

“Prices remain higher than a year ago, and rates remain in the mid-7% range,” Jones concludes. “Meaning that unaffordability is likely to persist for the time being.”

Why the pace of home sales is picking up

While the pace of home sales tends to slow to a crawl in the fall, this season has been different on this front, too.

“This fall, the time a typical home spends on the market is growing much more slowly than is typical for this season,” says Jones.

In fact, the pace of sales has recently been speeding up. For the week ending Nov. 18, homes spent four fewer days on the market compared with this same time last year.

The take-home lesson for buyers is that if they see a home they like, they should not wait to close the deal—and that this holiday housing market is shaping up to be a highly unusual one.

When Katie Cessna and her boyfriend began home hunting in Indianapolis late last year, she was excited. With two good jobs, minimal student loan debt, and enough cash for a 20% down payment, they would soon become homeowners, she thought.

However, Cessna, who is now 31 and works in public relations, didn’t expect to lose six bidding wars in a row. And she and her boyfriend, a pharmacist, weren’t anticipating mortgage rates to continue to climb. And climb.

When they started looking at homes, rates were in the 6% range. By their calculations, a monthly mortgage payment would have been cheaper than renting. But as rates continued to rise, that script was flipped. When they gave up and signed the lease on an apartment this summer, rates were above 7% and renting cost them less each month than buying.

“We thought we had really good financial standing to put us in a good spot to purchase a home,” says Cessna. But “the writing was on the wall. Interest rates just kept going up, and we kept putting in offers and having to go $30,000 to $50,000 over asking. … We didn’t want to end up home-broke.”

Many aspiring homebuyers have had their plans derailed as mortgage rates have more than doubled over the past two years. As rates recently rose to nearly 8%, many first-time homebuyers have dropped out of the housing market. The higher rates, plus home prices remaining historically high, have pushed monthly housing payments up against or beyond their financial limits.

Plenty of younger millennials and members of Generation Z believe they have “missed the boat” to buy a home. Even as mortgage rates have ticked down a little over the past week or so, some believe homeownership will remain far out of reach.

That’s left many homebuyers experiencing anxiety, feelings of failure, and grief over the trajectory they thought their lives would take, say therapists.

“It’s really difficult to find a house they can afford,” says Jung Choi, a senior research associate at the Urban Institute. “Younger buyers with less wealth and little parental support are going to face more challenges.”

Cessna and her boyfriend might have given up for now, but they do expect to eventually reenter the market. Mortgage rates would just need to come down to the 5% range to lure them back in—a prospect they know that could be years off.

“The months we were looking were probably the worst six months of our relationship,” she says. “It was getting excited about something and then getting torn down about it.”

Dashed dreams can lead to stress, anxiety, and anger

Over the past year or so, the topic of not being able to afford to purchase a home has come up in nearly half of therapist Kayla Crane‘s sessions with clients.

“I hear a lot of discouragement, a lot of hopelessness. ‘Are we ever going to be able to afford a home?’” says Crane. She is a licensed marriage and family therapist in Denver. Higher rates “really messed up a lot of people’s plans. It shattered some people’s dreams.”

She had clients who had put a deposit down on a home that was under construction. However, there were delays on the builder’s side, and by the time the home was ready, the couple could no longer afford it at the higher mortgage rate. Their payments would have been about $1,000 more a month. They had to back out of the deal and lost their deposit.

“The idea that they might not be able to afford a home, that can be really anxiety-provoking and scary,” says Crane. “They’re grieving the loss of what they thought their life was going to look like.”

Crane’s seen the higher rates upend the plans and trajectories of her patients. Many had planned to get married, buy a house, and have children.

That might have been possible when rates were below 3%, during the COVID-19 pandemic, but not so much now that monthly mortgage payments have basically doubled over the past three years.

Some of Crane’s patients are even putting off having a new baby because they don’t believe they have enough space to raise the child in their apartments.

She’s spoken to couples who are having to reevaluate whether they can afford to have one parent stay at home to raise the children. They can’t afford the higher mortgage payments on one income.

This sort of stress and feelings of failure often manifest as anger—which can then be directed at the individual’s partner.

“It’s been truly devastating,” says Crane.

Some buyers may have to move to become homeowners

The only way that medical writer Janice Lin, 28, believes that she and her boyfriend will become homeowners will be for them to pull up roots and move to another region entirely.

They live in Silicon Valley’s San Jose, CA, one of the priciest real estate markets in the nation. She expects they will eventually have to move to a cheaper part of the country if they want to purchase a home.

“We feel like we missed the boat,” says Lin. She hadn’t met her boyfriend and wasn’t ready financially when rates were at record lows, bottoming out at an average of 2.65% in early January 2021, according to Freddie Mac data. “It does feel a bit hopeless [now].”

The silver lining for Lin is that her monthly rent payment is lower than a mortgage would be. This allows her to save that extra money and invest it.

“Maybe the new status quo is people don’t own, they rent,” says Lin. “It’s OK to just be renters and not be homeowners at this age.”

Many younger folks are coming to the unwelcome realization that they might not be able to afford to purchase homes, like their parents or grandparents were able to do at their ages, says Julia Baum. She is a licensed therapist serving clients in New York City and California.

Many of her millennial patients are still striving to achieve the American dream of homeownership. But they’re “butting up against the reality that it may not be feasible right now,” says Baum.

“It’s incredibly stressful,” Baum says. “It’s a loss of the future they had anticipated.”

Higher mortgage rates are thwarting homebuyers of all ages

It isn’t just younger, first-time buyers who are buckling under the weight of higher mortgage rates.

Widower Garrett Allen, 53, hopes to purchase a two- or three-bedroom, single-family house outside of Philadelphia. He sees it as an investment that will grow in value over time. Plus, he and his grown son can live in it.

However, he’s lost three bidding wars since he began looking last year. His budget, between $200,000 and $250,000, puts him in direct competition with investors and home flippers. But he doesn’t plan on giving up.

“If you’re renting, all your money is going out the door. If you purchase, you may be paying slightly higher [payments], but you’re building equity,” he reasons. “You’re creating an asset that’s going to be worth more than what you’re spending.”

Even older generations who already own homes are feeling trapped.

Every two years or so, criminal attorney Joe Gutheinz and his wife like to move to a new house. However, the 68-year-old, self-described “military brat” is planning to stay put in the Pearland, TX, home that he already owns, at least for now.

“I don’t want to lose the 2.25% interest rate,” Gutheinz says of his current mortgage. “But we’re gypsies by nature—we love to move.”

The upside to rising mortgage rates

While higher mortgage rates have dashed the dreams of many aspiring homeowners, Agatha Isabel, 31, credits them with helping her to get her offer accepted.

Last year, Isabel, who works in data privacy for a tech company, moved from Brooklyn to Southern California. In December, she purchased a three-bedroom, 1.5-bathroom townhouse less than a mile from the ocean in Huntington Beach, CA. The hordes of buyers dried up as mortgage rates rose, giving her an edge in the market.

She was able to negotiate down the price, and the sellers even bought down her mortgage rate a full percentage point for her first year as a homeowner.

“I had no competition,” says Isabel. “For me, it was less stressful than trying to bid for a home during the pandemic at a lower interest rate.”

For those who can’t afford a home right now, therapist Baum encourages them to explore what it is that they value about homeownership. They can then look at if it’s possible to make progress toward homeownership or achieve their goal through something more attainable.

Crane recommends folks try to reframe their situations and make new plans for the future.

“They have to move forward,” she says.

Bargain Hunters, Rejoice: Top 20 Emerging Housing Markets Deliver on Affordability This Fall in the D.C., Maryland, and Virginia Region

As of fall 2025, the real estate landscape in the Washington, D.C., Maryland, and Virginia (DMV) area presents a unique opportunity for buyers seeking affordability amidst a fluctuating market. While the broader region experiences rising home prices and inventory shortages, certain neighborhoods and counties offer more budget-friendly options without compromising on quality of life.

Washington, D.C. Metro Area

1. Anacostia (D.C.)
   Once overlooked, Anacostia has seen a resurgence due to community-led development and increased investment in public infrastructure. The median home price remains below $400,000, offering potential for appreciation as the area continues to gentrify.
2. Deanwood (D.C.)
   With its proximity to the Minnesota Avenue Metro station, Deanwood is attracting first-time homebuyers and investors. The neighborhood offers single-family homes and rowhouses at prices significantly lower than the city average.
3. Fort Totten (D.C.)
   Benefiting from recent transit-oriented development, Fort Totten provides affordable housing options with easy access to downtown D.C. The area’s median home price is approximately $450,000, making it accessible for young professionals.
4. Congress Heights (D.C.)
   This neighborhood is undergoing revitalization with new retail and community centers. Homes here are priced below $350,000, presenting opportunities for equity growth as development continues.

Maryland

5. Oxon Hill (Prince George’s County)
   Located near National Harbor, Oxon Hill offers affordable single-family homes with easy access to major highways and public transportation. The median home price is around $375,000, appealing to commuters and families.
6. Suitland (Prince George’s County)
   Suitland provides budget-friendly housing options with a median home price of $325,000. The area is benefiting from infrastructure improvements and proximity to federal employment centers.
7. Temple Hills (Prince George’s County)
   With a median home price of $300,000, Temple Hills offers affordable housing in a suburban setting. The area is attracting buyers seeking value without sacrificing convenience.
8. Baltimore City (Various Neighborhoods)
   Neighborhoods like Highlandtown, Hamilton, and Belair-Edison offer homes under $250,000. These areas are experiencing gradual gentrification, making them ripe for investment.
9. Hagerstown (Washington County)
   Hagerstown’s median home price is approximately $200,000, offering affordability for families and retirees. The city’s revitalization efforts are enhancing its appeal.
10. Frederick (Frederick County)
    While Frederick’s median home price has risen to around $450,000, it remains more affordable compared to other parts of Maryland. The city’s historic charm and amenities continue to attract buyers.

Virginia

11. Danville (Pittsylvania County)
    Danville offers a low cost of living with median home prices around $110,200. The city’s revitalized downtown and lack of Social Security income tax make it attractive for retirees .
12. Martinsville (Martinsville City)
    Martinsville provides affordable housing options with a median home price of $125,000. The area is focusing on economic diversification and community development.
13. Hopewell (Hopewell City)
    With a median home price of $150,000, Hopewell offers budget-friendly housing. The city’s proximity to Richmond and industrial base support its economic stability.
14. Petersburg (Petersburg City)
    Petersburg’s median home price is approximately $160,000. The city’s historical significance and ongoing revitalization efforts make it appealing for investors.
15. Lynchburg (Lynchburg City)
    Lynchburg offers a median home price of $200,000. The city’s educational institutions and cultural amenities contribute to its livability.
16. Roanoke (Roanoke City)
    Roanoke’s median home price is around $210,000. The city’s outdoor recreational opportunities and healthcare sector support its economy.
17. Blacksburg (Montgomery County)
    Blacksburg provides a median home price of $220,000. The presence of Virginia Tech and a strong tech industry bolster the local economy.
18. Abingdon (Washington County)
    Abingdon’s median home price is approximately $230,000. The town’s historic district and cultural events enhance its appeal.
19. Big Stone Gap (Wise County)
    Big Stone Gap offers a median home price of $240,000. The town’s scenic beauty and community-oriented lifestyle attract residents.
20. Wytheville (Wythe County)
    Wytheville’s median home price is around $250,000. The town’s location along major highways and emphasis on tourism support its economy.

Market Trends & Insights

• Inventory Levels: The Washington, D.C. metro area has experienced a significant increase in active listings, with a 40.1% rise year-over-year by the end of July 2025. This surge indicates a shift towards a more balanced market, providing more options for buyers .
• Affordability Challenges: Despite the increase in listings, affordability remains a concern. In Maryland, a renter needs to earn more than twice the minimum wage to afford a one-bedroom apartment, highlighting the ongoing affordability crisis .
• Interest Rates: Mortgage rates have more than doubled from 2.99% in June 2021 to 6.82% in June 2025, significantly raising monthly payments and impacting affordability .

Strategic Considerations for Buyers

• Explore Emerging Markets: Consider neighborhoods and counties with lower median home prices and ongoing development, such as Anacostia, Oxon Hill, and Danville.
• Monitor Interest Rates: Stay informed about mortgage rate trends and consider locking in rates when favorable.
• Evaluate Long-Term Value: Focus on areas with potential for appreciation due to infrastructure improvements and community development.
• Consult Local Experts: Engage with real estate professionals familiar with emerging markets to navigate the evolving landscape effectively.

By strategically targeting these emerging markets, buyers can find affordable housing options in the D.C., Maryland, and Virginia region, balancing cost with potential for long-term value.

An update this week to a little-known law could help combat racial discrimination in mortgage lending.

Bank regulators made changes to the Community Reinvestment Act, instituted in 1977. The update is an effort to fight the legacy of redlining and will require banks to make more mortgages in lower-income areas. This was the first update to the law since 1995.

However, the law wouldn’t affect credit unions and nonbank lenders—which make up the majority of mortgage lenders.

“This is going to help encourage banks to lend more in areas where the lending is needed the most,” says David Dworkin, president and CEO of the National Housing Conference, which represents more than 300 affordable housing organizations. Banks “will do a much better job of helping communities and people of color.”

Banks will be required to make more loans in lower-income communities in areas where they do a lot of mortgage and small-business loans—instead of just where they have a brick-and-mortar location.

The update was approved by the U.S. Federal Reserve, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency, and it goes into effect in 2026.

“It’s going to change the way banks think about where and how they lend,” says Dworkin. “This will encourage banks to make smaller mortgages, which are safe and sound but less profitable than jumbo loans in high-end communities.”

Previously, banks were rated on their lending only in communities where they had a physical branch. Online banks were judged only in the area where they were headquartered. Those that received low ratings weren’t allowed to participate in mergers and acquisitions.

The goal of the changes is to increase lending in low- and moderate-income communities so residents can purchase homes and start businesses. It’s meant to address the effects of redlining, when mortgage lenders refused to make loans to minority applicants and in minority communities. This prevented many people of color from becoming homeowners or led them into more expensive or predatory loans.

“This update is both long overdue and essential,” National Community Reinvestment Coalition President and CEO Jesse Van Tol said in a statement. “Marginalized communities still suffer from a variety of inequities in mortgage and small-business lending, and from the enduring effects of historic financial discrimination.”

However, there are concerns that banks might choose to close up shop in lower-income areas rather than make more loans in these communities.

In addition, only banks with more than $600 million in assets would be affected.

Timing is everything—and that is particularly true when it comes to buying a home.

The dream? Drop into the market when prices, mortgage rates, and competition from other buyers is low—and then snag a large, move-in ready home in a desirable area for a sweet deal.

The reality? Today’s real estate market is highly competitive and highly expensive—and many homebuyers are having to settle, or drop out of the market entirely

So when is the best time to buy a home? Well, for certain markets, right now actually. There are places where buyers have the upper hand—or, at the very least, the out-of-control bidding wars have calmed down and buyers have a bit more time to make up their minds. The economics team at Realtor.com® found the markets where the optimal time to purchase a home is still ahead.

Fortunately, our data specialists have been grappling with this question for years by tracking buyer-friendly market conditions for every week of the year. They looked at median home list prices; the number of homes for sale; the number of new “fresh” listings; how long a home is on the market before it sells; homebuyer demand based on the number of listing views received on Realtor.com; and the number of price reductions.

The Realtor.com team looked at the best individual weeks to buy a home in the 50 largest metropolitan areas. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

“This year’s market has slowed considerably compared to years past, a welcomed shift for buyers,” Realtor.com senior economic analyst Hannah Jones wrote in the latest “Best Time to Buy” report.

“In many markets, homes are spending more time on the market than in the last few years, meaning buyers may find sellers more flexible than during the red-hot pandemic market,” she wrote. “Still-high mortgage rates mean that the typical buyer would still pay more as a monthly payment for a median-priced home compared to last year, but the relentless climb in prices has finally come to a halt.”

By examining data from 2018, 2019, 2021, and 2022 (excluding 2020 due to COVID-19 anomalies) and comparing it with 2023, the team pinpointed the first week of October as the optimal time to buy this year. Buyers who braved the market could expect a wider selection of homes for sale, fewer competing offers, and savings of over $15,000 compared with the summer peak for a median-priced home of $445,000.

However, real estate is local. In some parts of the country, the best time to buy is in the rearview; in others, it is still coming up.

In a handful of markets, the most favorable conditions for buyers actually occur later in the year, defying conventional wisdom that the housing market slows down as the weather cools.

Now, let’s take a closer look at the seven major metropolitan areas where late fall and winter offer the best conditions for homebuyers.

1. Louisville, KY

Best week to buy: Nov. 5–11

Median list price: $316,358

In the heart of the Bluegrass State, Louisville offers a unique blend of Southern charm and urban sophistication. And if you’re looking to score a real estate deal, mark your calendar for the first week of November.

Louisville tops our list with the biggest rate of price reductions during this optimal week, when compared with an average week for the area. Sellers here are highly motivated to close deals during this time of the year.

Couple that with 20% more active listings than the average week in Louisville, and you’ve got a buyer’s buffet.

And if you’re worried about competition, don’t be. Views per property are down a staggering 33% compared with peak times, making this the opportune moment to snag your dream home in the land of bourbon and horse racing.

The vast majority of homes for sale in the city proper are single-family homes, but buyers can still find condos and townhomes. This four-bedroom, two-bathroom Cape Cod with a sunroom is on the market for $259,000.

2. Phoenix, AZ

Best week to buy: Nov. 5–11

Median list price: $532,000

The Phoenix metro, affectionately referred to as the Valley of the Sun, includes a smattering of cities from Scottsdale to Glendale and Anthem to Chandler. This time of the year draws snowbirds from the chilly north, but it’s also the prime time season for real estate.

Around this time of year, buyers drawn by the warm winter weather start heading to Phoenix.

“What happens in the first week of November in Arizona?” asks Kristy Ryan, a Realtor® at Re/Max Fine Properties in Scottsdale. “It’s heaven. It’s like 82 degrees. We’re getting ready to head into the best eight months of the year where it’s 80 degrees every day, sunny and beautiful.”

The first week of November is a unique window of opportunity here, with 28% more new listings than an average week—the highest on our list.

This four-bedroom, three-bathroom brick house is on the market for just under $585,5000. Buyers who don’t need as much space can check out this three-bedroom, two-bathroom new construction for just under $400,000.

3. Charlotte, NC

Best week to buy: Nov. 5–11

Median list price: $425,000

Charlotte, the Queen City, has become a crown jewel of the South, with booming tech and financial industries. It’s also home to the NASCAR Hall of Fame and the headquarters of Fortune 500 companies like Bank of America and Lowe’s. The metro also includes nearby Concord and Gastonia.

Charlotte offers a royal opportunity for buyers in the first full week of November.

Active listings are up by 18% compared with the average week, and price reductions hover around 1.2%.

The city’s diverse neighborhoods, from the historic Fourth Ward, where buyers can snag condos in gleaming towers or lower-rise brick complexes, to the artsy NoDa, where there are smaller cottages and Cape Cods for sale along with brand-new townhomes, offer a range of options for every kind of buyer.

4. Birmingham, AL

Best week to buy: Nov. 5–11

Median list price: $299,000

Birmingham, a city that became synonymous with the Civil Rights Movement in the 1960s, is now becoming known for its burgeoning food scene and rich music and arts culture.

For buyers shopping in the Birmingham metro in early November, homes typically stay on the market for an average of more than three weeks longer than the area’s peak homebuying season. So it’s a good thing the winters here are so mild this time of year, with a weather-comfort index rated at 8 out of 10 in the month of November.

With just 1.1 million residents, Birmingham is the smallest metro on our list (closely followed by Buffalo, NY).

Buyers can find newly constructed three-bedroom, two-bathroom homes for about $270,000 or a remodeled three-bedroom, two-bathroom ranch for about $240,000.

5. Buffalo, NY

Best week to buy: Nov. 12–18

Median list price: $259,900

Buffalo offers more than just great wings and Bills football games.

“As a buyer, the best week is in November,” says Matthew Roland, assistant dean at the University of Buffalo’s Department of Urban and Regional Planning.

Home sellers who haven’t found buyers by this time, he says, are often in a rush to close deals.

“Sellers are thinking, ‘Oh, no, I have to sell this now,’” he says. “So they’re slashing prices or throwing anything they can at that buyer.”

The second week of November is a quiet time for the market, with a 50% drop in views per property—the biggest on our list.

“Nobody really wants to move or close in December unless they absolutely have to,” Roland adds.

Homes also stay on the market for 28 more days compared with peak times, giving buyers the luxury of choice without the pressure of immediate competition. And with the least expensive median list price on our list, Buffalo offers affordability without sacrificing charm.

6. Tampa, FL

Best week to buy: Dec. 3–9

Median list price: $439,244

Tampa, a city that straddles the spot where the Gulf of Mexico meets Tampa Bay, is a treasure trove for homebuyers in early December.

“Our market is totally different because we are not cyclical based on seasons at all, as most of the North is,” says Caitlin Jones, a Realtor with Dalton Wade Real Estate Group, in St. Petersburg. That’s because the warm weather is year-round, drawing buyers even during what would be the offseason of other markets.

The Tampa metro, which includes St. Petersburg and Clearwater, typically experiences a more than 40% drop in views per property compared with peak times. That means the competition has traditionally been as mild as a Florida winter.

The state’s tax laws also contribute to making it a good time to buy, Jones says.

Florida’s generous homestead exemption can provide significant property tax savings—and is portable, meaning it can be transferred from one homestead property to another. However, claiming the benefit requires owning the home on Jan. 1, or else having to wait until the following year.

“If you’re able to sell by the end of the year, there’s a tax benefit,” Jones adds.

Best week to buy: Jan. 8–14

Median list price: $599,000

Miami, the Magic City, saves its best tricks for the new year.

To be sure, it’s the most expensive market on our list. It also became hugely popular during the pandemic as companies expanded and relocated in the area and scores of new residents poured in, boosting competition and home prices.

If you have your heart set on living in Southern Florida, it could pay off to hold out until the first weeks of 2024 to ensure the best buying conditions in the Miami metro, which also includes Fort Lauderdale and Pompano Beach.

New listings are up by 8% compared with the average week, giving buyers a fresh array of choices in this vibrant, multicultural metropolis.

This remodeled five-bedroom, two-bathroom house is on the market for $740,000, while these newly constructed three-bedroom, 2.5-bathroom townhomes are listed at about $485,000.

With mortgage interest rates hitting record highs not seen in decades and quickly approaching 8%, many might wonder: How much more does it actually cost to buy a house today?

According to a new report by Realtor.com®, the monthly cost of financing 80% of a typical home jumped by $166 in October compared with this same month last year.

That’s “a new record, on top of what was already the highest amount since Realtor.com began tracking this data in mid-2016,” says Realtor.com Chief Economist Danielle Hale.

Do the math, and this means that today’s homebuyers must cough up $2,405 per month for the privilege of owning a house. And in order to comfortably afford those mortgage payments, a homebuyer would need an annual salary of $119,500—nearly double the actual median household income of $64,240.

In other words, the typical American makes only about half as much as they need to afford a home today.

The latest trends in home prices

Sky-high mortgage rates aren’t the only metric keeping real estate in a prolonged affordability crunch.

Despite high mortgage rates, home prices aren’t budging much, with the median list price in October hovering at $425,000. That number has remained more or less stable compared with this same time last year.

“Listing prices have been buoyed by scarce inventory,” says Hale.

The one upside for buyers is that home prices are declining seasonally, down from $430,000 in September. They’re also down from their all-time high of $450,000, in June 2022.

Do the math, and this means that today’s homebuyers must cough up $2,405 per month for the privilege of owning a house. And in order to comfortably afford those mortgage payments, a homebuyer would need an annual salary of $119,500—nearly double the actual median household income of $64,240.

In other words, the typical American makes only about half as much as they need to afford a home today.

The latest trends in home prices

Sky-high mortgage rates aren’t the only metric keeping real estate in a prolonged affordability crunch.

Despite high mortgage rates, home prices aren’t budging much, with the median list price in October hovering at $425,000. That number has remained more or less stable compared with this same time last year.

“Listing prices have been buoyed by scarce inventory,” says Hale.

The one upside for buyers is that home prices are declining seasonally, down from $430,000 in September. They’re also down from their all-time high of $450,000, in June 2022.

Why low housing inventory keeps prices higher than usual

The overall number of homes for sale in the U.S. sank by 2% in October compared with this same month last year. That percentage might not seem dramatic at first glance, but this scarcity of listings is downright shocking when compared with pre-COVID-19 levels from 2017 to 2019, which boasted 42.4% more homes for sale.

As for fresh listings, those were also down by 3.2% in October, compared with last year.

A growing number of buyers are turning to purchasing new construction.

“New-home sales have been increasing,” says Hale. However, “construction activity isn’t elevated enough to fully bridge the low inventory gap.”

The housing inventory outlook

So, when can buyers expect to see a substantial increase in new listings and active inventory overall?

“That is the trillion-dollar question in housing right now,” says Hale, who expects it will be “quite a bit longer before buyers can see a large increase in new listings and the number of homes for sale.”

The delay all comes down to sellers who feel “locked in” to their much lower mortgage rates of just a few years earlier.

“Because so many homeowners either purchased their home or refinanced their mortgage during the pandemic period, when interest rates were low, their homes are likely still a very good fit for their needs and quite affordable,” explains Hale. “Especially relative to the cost of buying at today’s mortgage rates.”

Motivated buyers are pouncing

In a surprise twist, the cruel combination of steep mortgage rates, high home prices, and scant listings doesn’t mean buyers can take their time making an offer. Instead, the opposite is true: Today’s buyers must act relatively swiftly when they spot a great home.

“Homes spent 50 days on the market, which is one day shorter than last year,” says Hale.

In fact, the average home spent 16 fewer days on the market than the pre-pandemic average for October from 2017 to 2019.

And although time on the market typically lengthens as we approach the holidays, “Time on market is rising more slowly this year than is typical during the fall season, as still-limited supply spurs homebuyers to act quickly and newly listed homes make up a greater share of low remaining inventory,” says Hale.

Where home prices are softening

The Federal Reserve held rates steady at its meeting on Wednesday, but it left open the possibility that more rate hikes could occur if inflation doesn’t keep coming down.

Until mortgage rates subside, today’s real estate market can be best described as a financial bully, grabbing homebuyers by the ankles and shaking every last nickel out of their housing budget.

Yet all real estate is local, and America’s 50 largest housing market metros do show some pockets of hope for homebuyers.

In the bad news column for buyers: In October, real estate listings in the top 50 metros dropped 6.7% compared with the same month last year, while the collective inventory across these areas is now 38.4% below pre-pandemic levels. (Metros include the central city, surrounding towns, suburbs, and smaller urban areas.)

But in the good news column? While overall home price reductions were still below last year’s levels in all four regions of the U.S., some of these metros were seeing sellers slash prices.

Indeed, “13 of the 50 large metros saw the share of price reductions increase compared to last October, predominantly in the South and Midwest,” says Hale.

The cities with the greatest increases in the share of price reductions are St. Louis, at 4.2%; Oklahoma City, OK, at 3.4%; and Memphis, TN, at 3%.

“While lower than last year, the share of price reductions rising could signal a softness in prices in the coming months,” concludes Hale.

The latest amenity for homeowners is another, smaller home.

These add-ons are known as accessory dwelling units. They can be free-standing miniature homes as small as a studio apartment and tucked away in a backyard. They can reside above a garage or in a basement and extend to more than 2,000 square feet.

ADUs are growing in popularity as states encourage their construction through zoning changes and homeowners seek ways to lower their housing costs by renting out these units. The typical cost to construct one is around $100,000, according to building-permit data company Builty

“It’s gone from a small niche in the market to really a much more impactful part of new housing,” said Scott Wild, senior vice president of consulting at John Burns Research and Consulting. “Municipalities love it, existing homeowners love it, developers love it.”

Now, more home builders are starting to offer ADUs as amenities. In Alpine Springs, a new-home community in Saratoga Springs, Utah, half of the 16 homes sold include an ADU in the basement at an added price of $35,000 to $70,000, said Chris Bley, chief investment officer at investment firm IHP Capital Partners.

A Freddie Mac study in 2020 identified 1.4 million single-family U.S. homes with ADUs, though the actual number could be higher. ADUs are difficult to track on a national basis, in part because they can be described in a variety of ways, such as casita, backyard cottage or garage conversion. Some homeowners also build them without permits.

The proliferation of ADUs comes as homeowners and renters around the U.S. are grappling with a shortage of housing and high home prices. Adding housing units on existing lots is seen by policy makers as a quick way to increase housing supply. California, Oregon, Maine and other states passed laws in recent years to encourage ADU construction.

An accessory dwelling unit above a garage connected to a single-family home

About 26,200 ADU permits were finalized, processed or under review in 2022 in eight major West Coast metro areas, including Los Angeles, San Francisco, Seattle and Portland, Ore., according to Builty. That represented a nearly 15% increase from the year before.

Home builders are helping propel that growth. In Williams Ranch, a master-planned community near Santa Clarita, Calif., about 20% of home buyers have selected floor plans that include ADUs, at an added cost of between $80,000 and $100,000, said Daniel Faina, chief marketing officer at California builder Williams Homes.

Hosting out-of-town visitors or renting to tenants are the top reasons consumers would consider an ADU, according to a 2022 Freddie Mac survey. But many homeowners also use them for home offices or other personal uses.

“For some buyers it’s really becoming a strategy, how to afford the home they want or maybe a little more home than they otherwise would have gotten,” Faina said.

Chantell and Jared Dennis bought a three-bedroom home in Williams Ranch in May with a one-bedroom ADU above the garage. They listed the ADU for rent and found a tenant within a day who pays $2,175 a month, which covers more than one-fourth of their total monthly housing costs.

“We’re going on vacation and our renter is watching our dogs right now,” Chantell Dennis said. “I think it’s genius.”

ADUs are often built by local contractors, but some companies are trying to use factories and modular construction techniques to lower costs and make ADU construction more standardized. San Francisco-based company Villa offers factory-built backyard ADUs in California with base prices from $95,000 to $180,000.

“The California market’s been just fantastic for us,” said Sean Roberts, Villa’s chief executive. “We see a good chunk of customers who do this just with cash on hand.”

Kelly Wilt, a psychotherapist with a private practice in Tucson, Ariz., and her partner bought a one-story home in July with an attached one-bedroom unit that Wilt uses as her office. Her mortgage payment is roughly equal to what she was previously paying to rent a house and an office, she said.

“I wanted separateness but also closeness,” she said of her home and office spaces.

ADUs aren’t going to solve the housing shortage on their own. They can be too expensive for many individual homeowners to build, and tiny homes aren’t a good fit for many renter households. Many homeowners also don’t want the headache of being landlords.

“I don’t think that it’s the cure-all for housing affordability,” Bley said. But “there’s no question that the consumer likes it.”

PHILADELPHIA—A new federal housing policy will make it easier for some home buyers to qualify for a mortgage by allowing them to include rental income from accessory dwelling units as part of their application.

The Federal Housing Administration announced Monday that under a new policy, it will allow lenders to count income from accessory dwelling units when underwriting a mortgage. The rental income from the ADU will be included in the borrower’s qualifying income.

The change in policy will “allow more borrowers to qualify for FHA financing for properties with ADUs,” the FHA said in a press release.

“This not only helps more people qualify for a mortgage and build wealth, it also helps to boost the supply in neighborhoods where housing is least available,” Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said during the Mortgage Bankers’ Association’s annual press conference on Monday.

An ADU is generally thought of as a smaller housing unit on the same lot where the main house is located, such as a granny flat. ADUs can be rented out to short- or long-term tenants, which can provide a source of income similar to if an owner of a multi-family unit lives in one unit and rents out the others to pay for the mortgage.

For homeowners looking to add an ADU, 50% of the estimated rental income from the unit will be used to qualify for a mortgage under the FHA’s Standard 203(k) Rehabilitation Mortgage Insurance Program. “This will enable more homeowners with limited incomes to build ADUs, helping them sustain homeownership and expanding the production of ADUs as rental housing,” the FHA said.

For homeowners who would like to buy a property with an existing ADU, the new FHA policy allows 75% of the estimated ADU rental income to count toward their ability to qualify for an FHA-insured mortgage.

The FHA also said that it would include ADU-specific appraisal requirements, so that appraisers can capture estimated rents that the unit can generate.

“FHA-approved lenders may begin offering borrowers mortgages on properties with ADUs under the new policies effective immediately,” the agency said.

Mark Fleming, chief economist at First American, said that the FHA’s decision to include rental income from an ADU is similar to what borrowers face when taking on a mortgage for a multi-family unit. “Why would an accessory dwelling unit be in a way treated any differently? It’s a source of income to that homeowner,” he said.

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Are your paint colors on trend?

Punchy and bold colors are out, while more neutral shades are in, according to a recent study conducted by Raleigh, NC-based home improvement contractor All Star Home. It was based on analyzing 1,821 Google search terms related to Sherwin-Williams and Benjamin Moore’s most popular paint colors over the past 12 months.

The company also interviewed more than 1,000 homeowners across the country about their paint color preferences.

Across the country, gray, white, beige, and greige (the lovechild of gray and beige) were the top paint colors.

“The fact that America continues to choose these colors for 2023 is certainly not surprising, given that the interior design market turned to neutrals during the [COVID-19] pandemic,” says Annamaria Zampogna, co-founder of architectural firm Forza Creativa. “Our homes are our refuge, and it is proven that gray, white, and beige are the flag bearers for promoting balance and serenity. This preference will continue as long as we look to add overall well-being in our lives.”

The most popular paint color in America was Sherwin-Williams’ Grizzle Gray, a darker, moodier gray, according to the study. It was followed by Benjamin Moore’s Palladian Blue, Sherwin-Williams’ Alabaster, Benjamin Moore’s Distant Gray, and Benjamin Moore’s Capitol White.

The states where homeowners preferred darker colors

However, not all U.S. states preferred these lighter, more muted shades of white and beige.

In America’s Southern and Western regions, for instance, homeowners preferred darker grays like Sherwin-Williams’ Iron Ore, which was the most searched-for paint color in Georgia, Texas, and Nevada.

States with larger inventories of older homes, like Illinois and Connecticut, slanted toward more historic colors like Benjamin Moore’s Revere Pewter.

Then there were the states that preferred darker, classic colors. Colder weather states Vermont and Alaska leaned toward Benjamin Moore’s Hale Navy, while in Mississippi folks preferred Benjamin Moore’s Black Forest Green.

Color is the hardest part

Choosing the right color is often the hardest part of a big renovation project.

About 40% of homeowners say they’ve regretted the original color they chose, and 32% have actually spent the time and money repainting a room because they didn’t like how it made them feel.

Zampogna recommends homeowners do some research on paint colors and take some paint swatches home with them before repainting a room.

“I am fascinated by how color can control environments and communicate a desired feeling,” says Zampogna. “We can use color to evoke the past or simply transport ourselves to a different landscape in our minds, so it’s essential to get it right.”

In DIY we trust

Americans also aren’t afraid to put on their painter’s pants and do it themselves—at least when it comes to their home’s interior.

About 93% of homeowners say they have painted at least one room in their house on their own, with only 1 in 5 of survey respondents saying that they found the job challenging.

However, homeowners were far less likely to brave painting the exterior of their homes on their own. Reflecting a logical fear of heights, ladders, and steep roofs, only 27% of homeowners surveyed said they had painted the outside of their abodes. Many preferred to leave those jobs to the professionals. (It’s a pretty good idea.)

Notwithstanding the DIY factor, painting remains a high-priority home improvement project on most homeowners’ to-do lists. Almost half of Americans would prefer that at least one room in their house were a different color, and about a quarter would like to paint their home’s exterior.

The most common reasons for putting those projects on the back burner are due to time constraints and budget limits.