House prices continued to climb during the Q2 of 2025
Record-Breaking Home Prices in U.S. Housing Market
The U.S. housing market has reached a significant milestone, with the national median single-family existing-home price climbing to a record high of $429,400 in the second quarter of 2025. Despite a slowing market momentum and declining sales, this record-breaking figure is primarily due to several interacting factors.
One of the key contributors to this trend is the limited inventory in the existing home market. Many homeowners are locked in with low mortgage rates, making them less inclined to sell, thereby creating a scarcity of listings. This scarcity, in turn, contributes to higher prices for existing homes.
Another factor influencing the market is regional variations in price growth. The Northeast and Midwest have experienced higher price growth due to limited inventory and affordability, respectively. However, regions like the South, particularly Florida and Texas, are seeing a price correction due to increased new home construction.
The market is witnessing a divergence between new and existing home prices. Builders are focusing on more affordable options, such as smaller homes, which has kept new home prices relatively stable. In contrast, existing homes have seen a price increase due to their scarcity and the factors mentioned above.
Economic conditions also play a role in shaping the market. Elevated mortgage rates have impacted home sales, keeping them below pre-COVID levels. However, the demand for housing remains strong in areas with significant job growth, which supports the higher prices in certain regions.
Despite the slowing market momentum, the median home price continues to rise, possibly due to high-income buyers dominating the market. The largest annual gains came from Toledo, Ohio (+10.5%), Jackson, Miss. (+10.5%), and Nassau-Suffolk, N.Y. (+9.6%).
However, moderate-income consumers remain on the sidelines of the U.S. housing market in Q2 2025. Housing affordability worsened quarter-over-quarter, with typical families spending 25.7% of income on mortgage payments.
The priciest markets remain concentrated in California and Hawaii, with San Jose-Sunnyvale-Santa Clara being the most expensive. The median home price in the Northeast region is $527,200, with a year-over-year increase of 6.1%. The median home price in the Midwest region is $328,800, with a year-over-year increase of 3.5%. In contrast, the median home price in the South region remains unchanged at $376,300, while the median home price in the West region is $646,100, with a year-over-year increase of 0.6%.
NAR Chief Economist Lawrence Yun attributes strong buyer demand in the Midwest to relative affordability and supply constraints in the Northeast. Just 170 out of 228 metro areas posted price gains in Q2 2025, compared to 198 in Q1. Seventy-five percent of metro areas posted year-over-year price gains in Q2 2025, down from 83% in Q1. Only 5% of metro areas saw double-digit price appreciation in Q2 2025, less than half the rate from earlier this year.
The South, particularly Florida and Texas, is seeing price corrections amid a surge in new home construction. This trend, coupled with the slowing sales, suggests a cooling market momentum in the U.S. housing market in Q2 2025, with mortgage rates returning to normal and moderate-income consumers remaining on the sidelines.
Read also:
- Citizen Thekla Walker, Minister, urges: "Let's face our responsibilities at home"
- Editorial Correspondence: Justifying the Elimination of a Program Earmarked for Reducing Our Own Carbon Footprint?
- Parliamentary proceedings in Germany's Bundestag this week
- Potential resistance encountered for Trump's nominee at the Federal Reserve
