Affordability Crisis: There’s No Easy Way Out

WASHINGTON – (By Dale King, Realty News Report) – Unflinchingly high home prices continue to throw obstacles in the way of what could have been a more fruitful home purchasing experience this year – as it did during 2023 and 2024.

But potential home buyers and sellers along with real estate professionals who’ve been searching for good news in the housing market just got some hopeful signs in the recently released National Association of Realtors’ Metropolitan Median Area Prices and Affordability and Housing Affordability Index.

The NAR report says 75 percent of metro markets (170 out of 228) registered home price gains in the second quarter of 2025, a drop from the 83 percent of major markets that reported price increases during the first quarter of the year.

The report also noted another beneficial decline – perhaps a bit more significant. NAR said that only 5 percent of metropolitan areas recorded double-digit home price advances in the second quarter, down from the 11 percent that reported upsurges of more than 10 percent during the first quarter of the year.

Mortgage rate lowest since October 2024

Of course, obstinately stubborn mortgage rates have also hindered the home sales market.

But folks scouring the housing market for an affordable residence at a fair loan rate also got a break this month. On Aug. 14, 2025, Freddie Mac released the results of its Primary Mortgage Market Survey showing the 30-year fixed-rate mortgage averaged a respectable 6.58% – “the lowest level since October,” said Sam Khater, Freddie Mac’s chief economist.

“Purchase application activity is improving as borrowers take advantage of the decline in mortgage rates,” Khater said. A year ago at this time, the 30-year mortgage averaged 6.49%, just before the above-mentioned autumnal dip.

Median home price up

Not all the news was totally rosy, though. NAR said the national median single-family existing home price grew 1.7% year-over-year to a new record high of $429,400 in the second quarter of this year. During the first quarter, the national median price increased 3.4 percent over the same period in 2024.

“Home prices have been rising faster in the Midwest, due to affordability, and the Northeast, due to limited inventory,” said NAR Chief Economist Lawrence Yun. “The South region – especially Florida and Texas – is experiencing a price correction due to the increase in new home construction in recent years.”

The employment conundrum

In the NAR report, Economist Yun revisited an issue he addressed at a National Association of Realtors’ economic webinar earlier this summer. Why, he again asked, has the burgeoning job market not resulted in a massive number of home buys in the past few years? The reason? Mortgage rates high enough to put the skids on a number of potential home purchases, he said.

“Home sales and the homeownership rate are underperforming relative to job growth,” Yun said in the report. “There have been more than 7 million net job additions compared to the pre-COVID peak. However, elevated mortgage rates have kept home sales below pre-COVID levels. The homeownership rate has fallen by a full percentage point since early 2023.”

But if mortgage rates decline – as he predicted will happen later in the year — “the strongest release of pent-up housing demand is likely to occur in states with significant job growth in recent years, such as Idaho, Utah, the Carolinas, Florida and Texas.”

Highlights of NAR report:

Median existing single-family home price by region

Northeast: $527,200 (+6.1 percent year over year)
Midwest: $328,800 (+3.5 percent year over year)
West: $646,100 (+0.6 percent year over year)
South: $376,300 (No change)

10 large markets with biggest y-o-y median price hikes

Toledo, Ohio (10.5 percent)
Jackson, Miss. (10.5 percent)
Nassau County-Suffolk County, N.Y. (9.6 percent)
New Haven-Milford, Conn. (9.0 percent)
Reading, Pa. (8.3 percent)
Springfield, Mo. (8.2 percent)
Akron, Ohio (8.1 percent)
Montgomery, Ala. (7.9 percent)
Cleveland-Elyria, Ohio (7.8 percent)
Rochester, N.Y. (7.8 percent)

10 Most expensive markets

San Jose-Sunnyvale-Santa Clara, Calif. ($2,138,000)
Anaheim-Santa Ana-Irvine, Calif. ($1,431,500)
San Francisco-Oakland-Hayward, Calif. ($1,426,000)
Urban Honolulu, Hawaii ($1,148,600)
San Diego-Carlsbad, Calif. ($1,025,000)
Salinas-Monterey, Calif. ($978,400)
Oxnard-Thousand Oaks-Ventura, Calif. ($958,100)
San Luis Obispo-Paso Robles, Calif. ($928,000)
Los Angeles-Long Beach-Glendale, Calif. ($879,900)
Boulder, Colo. ($859,500)

Housing affordability

$2,256: The monthly mortgage payment on a typical existing single-family home with a 20 percent down payment
- 6.5 percent increase quarter-over-quarter
- 0.3 percent decrease year-over-year
25.7 percent: The average share of income typical families spent on mortgage payments
- Up from 24.4 percent last quarter
- Down from 26.9 percent last year

First-time buyers

$2,212: The monthly mortgage payment for a typical starter home valued at $365,000 with a 10 percent down payment
- $134 increase from Q1
- $6 decline year-over-year
38.7 percent: The share of income first-time buyers spent on monthly mortgage payments
- Up from 36.8 percent in Q1
- Down from 40.6 percent year-over-year.

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Mark Your Calendar — Houston Design Collaborative will present a lecture and book signing featuring Texas journalist Megan Kimble on Sept. 10 at Midtown Arts & Theater Center, 3400 Main Street. Kimble is the author of “City Limits: Infrastructure, Inequality, & the Future of America’s Highways.

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