• Homebuyers and renters have had plenty of frustrations in the last few years.
• However, affordability improved by one key measure in 2024.
• Here are 11 major US cities where buyers and renters can save more money.

Affordability remains a major problem in the US real-estate market, but buyers and renters are getting a bit more breathing room in several major cities.

Millions of Americans were less than thrilled with their living situations in 2024 — a year marked by limited property transactions due to stubbornly high mortgage rates and inflated home prices.

Those looking to buy houses largely held off, which frustrated the homeowners looking to move. Younger renters were especially unlikely to purchase property, and although they've benefited as rent has steadily fallen from its post-pandemic peaks, it's still much more costly than in 2019.

However, recently released rental data from Realtor.com shows a few silver linings for both homebuyers and renters. The research firm found that median rent in the US declined on a year-over-year basis for the 18th straight month, even though the drop was modest at -0.2%.

But the biggest takeaway is that affordability improved in a majority of the 50 largest US cities tracked by Realtor.com, as measured by the change in the share of money spent on housing.

Rent was a smaller percentage of budgets compared to 2023 in over 90% of major markets, Realtor.com found. And homebuyers put less of their income toward mortgage payments than they would have the year before in nearly two-thirds of the biggest metropolitan areas.

While massive cities like San Francisco and Miami aren't known for affordability, Realtor.com's findings indicate that buyers and renters there are able to save more money staying there than they would have a year prior, since the share of income going to landlords or lenders is smaller.

11 cities where affordability is improving

There are 11 cities where buyers and renters put a substantially smaller chunk of their money toward mortgages or rent on a percentage-of-income basis in 2024 versus the year before, according to Realtor.com. In each, the change in the share of income spent on buying or renting fell by at least 1.5 percentage points.

It's commonly accepted that people should spend 30% or less of their salary on housing costs. Buyers and renters are far exceeding that mark in some of the more expensive cities on this list, though everyone's financial situation is different.

Below are those markets — sorted by lowest rent to highest — along with each's median rent, the year-over-year change in rent, the share of income spent on rent and home purchases, and how that share has changed compared to the prior year.

1. Dallas

Median rent: $1,445

Year-over-year rent change: -3.5%

Share of income spent on rent: 19.5%

Change in share of income spent on rent: -2.1 percentage points

Share of income spent on buying: 29.3%

Change in share of income spent on buying: -1.7 percentage points

2. Austin

Median rent: $1,467

Year-over-year rent change: -4.8%

Share of income spent on rent: 17.2%

Change in share of income spent on rent: -2.4 percentage points

Share of income spent on buying: 30.3%

Change in share of income spent on buying: -4.2 percentage points

3. Richmond, Virginia

Median rent: $1,481

Year-over-year rent change: -0.3%

Share of income spent on rent: 20.3%

Change in share of income spent on rent: -1.5 percentage points

Share of income spent on buying: 30.2%

Change in share of income spent on buying: -2.2 percentage points

4. Phoenix

Median rent: $1,488

Year-over-year rent change: -3.5%

Share of income spent on rent: 20.4%

Change in share of income spent on rent: -2.1 percentage points

Share of income spent on buying: 36.6%

Change in share of income spent on buying: -2.2 percentage points

5. Jacksonville, Florida

Median rent: $1,510

Year-over-year rent change: -1%

Share of income spent on rent: 22.1%

Change in share of income spent on rent: -2.5 percentage points

Share of income spent on buying: 29.4%

Change in share of income spent on buying: -3.1 percentage points

6. Nashville

Median rent: $1,539

Year-over-year rent change: -2.5%

Share of income spent on rent: 21.7%

Change in share of income spent on rent: -1.7 percentage points

Share of income spent on buying: 38.6%

Change in share of income spent on buying: -2.8 percentage points

7. Tampa, Florida

Median rent: $1,710

Year-over-year rent change: -1.6%

Share of income spent on rent: 28.1%

Change in share of income spent on rent: -1.9 percentage points

Share of income spent on buying: 34%

Change in share of income spent on buying: -2 percentage points

8. Denver

Median rent: $1,796

Year-over-year rent change: -5.6%

Share of income spent on rent: 20.2%

Change in share of income spent on rent: -3 percentage points

Share of income spent on buying: 33.4%

Change in share of income spent on buying: -3 percentage points

9. Miami

Median rent: $2,328

Year-over-year rent change: -1.9%

Share of income spent on rent: 37.6%

Change in share of income spent on rent: -2.9 percentage points

Share of income spent on buying: 43.9%

Change in share of income spent on buying: -4.1 percentage points

10. San Diego

Median rent: $2,695

Year-over-year rent change: -4.8%

Share of income spent on rent: 31.4%

Change in share of income spent on rent: -3.4 percentage points

Share of income spent on buying: 57.7%

Change in share of income spent on buying: -2 percentage points

11. San Francisco

Median rent: $2,708

Year-over-year rent change: -3.3%

Share of income spent on rent: 24.3%

Change in share of income spent on rent: -1.9 percentage points

Share of income spent on buying: 41.4%

Change in share of income spent on buying: -2.7 percentage points

• Property values fell by about 2% in January as mortgage rates remained high.
• Buyers appear to be waiting for affordability to improve.
• Here are 31 cities that are getting the most attention from buyers so far in 2025.

The US housing market is still in hibernation mode as aspiring homebuyers continue to hold out for lower mortgage rates and property prices, though some markets are as popular as ever.

A seasonally quieter stretch in the real-estate market is off to a sleepy start. Home prices slid 2.2% in January from the year before, Realtor.com researchers noted late last month, in part because the 30-year fixed mortgage rate had topped 7% for the first time in over seven months. Borrowing costs are now at 6.9%, still higher than the 6.6% rate in early 2024.

Slightly cheaper property prices may help some buyers get their feet in the doors of new houses. But if mortgage rates remain this restrictive, many more may still be sidelined. That would mean falling home values are both a letdown for owners and not enough to help would-be owners.

"Buyers are really facing a double-whammy on affordability at this point," said Hannah Jones, a senior economic research analyst at Realtor.com, in a recent interview. On the national level, she said succinctly that "the typical buyer cannot afford the typical home."

Surging home inventory is also weighing on prices. Housing construction has boomed, which contributes to the 24.6% annual jump in active listings that Realtor.com observed in January. Having more options makes buyers choosier, as they don't have to buy the first home they see.

However, there are signs that this frosty market is thawing — at least in certain regions.

31 highly popular cities among buyers

Although higher mortgage rates are a headache, buyers have still flocked to a few dozen cities so far this year.

Realtor.com just published its updated list of the hottest US housing markets, which is based on how long home listings stay on the market and how in-demand they are, as measured by traffic on its website. The more unique property views, the higher a city's ranking is.

Home listings in the 20 most in-demand markets received about 2.6 times the demand of typical US homes last month, and sold three weeks earlier than the US median property. That strong demand drove prices up 1.5% from the year before in January.

What's fascinating is that all 20 of those hot cities were in either the Northeast or Midwest, which differs from Business Insider's research showing that eight of the 10 most-popular cities of 2024 were in the Southeast. However, Jones remarked that Northeast and Midwest markets have stood out since mid-2022, which is when mortgage rates first spiked.

"The Midwest, and some of these Northeast markets, are just outright affordable, relative to the rest of the US," Jones said. "Relative to local incomes, they're also relatively affordable. These are areas that just would appeal to anyone locally or elsewhere because homes are relatively low-priced."

While some of these hot markets are much more expensive than the US median price of $400,500, Jones noted that they're still a good deal compared to nearby cities. For example, the hottest location in January was Manchester, New Hampshire, which has a median home value of $578,975 that's far cheaper than nearby Boston's typical price tag of $799,450.

Buyers looking to leave major cities often look to nearby markets. When that happens in droves, it drives that town's relatively low prices far higher — creating a paradox of sorts.

"In these more affordable markets, inventory is still really low relative to pre-pandemic," Jones said. "Which means that a lot of buyer demand is coming into relatively few homes."

Notably absent from Realtor.com's list of hottest markets is the Sun Belt region, which boomed early in the pandemic but has since seen prices come back to earth as supply started to surge.

"They got so hot and so popular that prices were able to rise to a point that buyers would no longer participate once mortgage rates came up," Jones said of properties in Sun Belt cities. "Prices are still really high in a lot of those markets, but inventory levels are high."

Home supply in those 20 hot markets rose 12.7% to start the year, and while that's a substantial jump, it's nearly half the rate of the national median. Also, there are about half as many home listings in these popular cities as there were before the pandemic.

Business Insider examined Realtor.com's data further and found that the 31 most popular cities in January were all either in the Northeast or Midwest, and 22 are cheaper than the US median.

Below are those markets, along with the multiple of property viewership versus the US median, the median days on the market in early 2024 and 2025, and the median listing price as well as how it compares to the US median price of $400,500.

1. Manchester, New Hampshire

Property viewership vs US median: 3.6x

Median days on the market: 46 days

Median days on the market last year: 44 days

Median listing price: $578,975

Savings vs the US median: -$178,475

2. Hartford, Connecticut

Property viewership vs US median: 4.1x

Median days on the market: 51 days

Median days on the market last year: 53 days

Median listing price: $408,375

Savings vs the US median: -$7,875

3. Kenosha, Wisconsin

Property viewership vs US median: 2.9x

Median days on the market: 45 days

Median days on the market last year: 45 days

Median listing price: $334,675

Savings vs the US median: $65,825

4. Norwich, Connecticut

Property viewership vs US median: 3.1x

Median days on the market: 52 days

Median days on the market last year: 51 days

Median listing price: $384,450

Savings vs the US median: $16,050

5. Worcester, Massachusetts

Property viewership vs US median: 2.6x

Median days on the market: 50 days

Median days on the market last year: 45 days

Median listing price: $527,425

Savings vs the US median: -$126,925

6. Concord, New Hampshire

Property viewership vs US median: 3.5x

Median days on the market: 53 days

Median days on the market last year: 58 days

Median listing price: $541,200

Savings vs the US median: -$140,700

7. Rockford, Illinois

Property viewership vs US median: 3x

Median days on the market: 53 days

Median days on the market last year: 56 days

Median listing price: $235,450

Savings vs the US median: $165,050

8. Lancaster, Pennsylvania

Property viewership vs US median: 2.4x

Median days on the market: 50 days

Median days on the market last year: 47 days

Median listing price: $408,640

Savings vs the US median: -$8,140

9. Providence, Rhode Island

Property viewership vs US median: 2.4x

Median days on the market: 52 days

Median days on the market last year: 54 days

Median listing price: $521,175

Savings vs the US median: -$120,675

10. Rochester, New York

Property viewership vs US median: 2.5x

Median days on the market: 53 days

Median days on the market last year: 34 days

Median listing price: $258,450

Savings vs the US median: $142,050

11. Milwaukee, Wisconsin

Property viewership vs US median: 2.1x

Median days on the market: 51 days

Median days on the market last year: 46 days

Median listing price: $362,500

Savings vs the US median: $38,000

12. Racine, Wisconsin

Property viewership vs US median: 2.2x

Median days on the market: 52 days

Median days on the market last year: 56 days

Median listing price: $334,900

Savings vs the US median: $65,600

13. Springfield, Massachusetts

Property viewership vs US median: 2.9x

Median days on the market: 56 days

Median days on the market last year: 45 days

Median listing price: $328,161

Savings vs the US median: $72,339

14. Reading, Pennsylvania

Property viewership vs US median: 2x

Median days on the market: 50 days

Median days on the market last year: 52 days

Median listing price: $330,000

Savings vs the US median: $70,500

15. Boston, Massachusetts

Property viewership vs US median: 2.3x

Median days on the market: 56 days

Median days on the market last year: 53 days

Median listing price: $799,450

Savings vs the US median: -$398,950

16. Peoria, Illinois

Property viewership vs US median: 2x

Median days on the market: 53 days

Median days on the market last year: 59 days

Median listing price: $143,400

Savings vs the US median: $257,100

17. Bloomington, Illinois

Property viewership vs US median: 2.4x

Median days on the market: 58 days

Median days on the market last year: 81 days

Median listing price: $291,000

Savings vs the US median: $109,500

18. Toledo, Ohio

Property viewership vs US median: 1.9x

Median days on the market: 52 days

Median days on the market last year: 50 days

Median listing price: $219,950

Savings vs the US median: $180,550

19. Oshkosh, Wisconsin

Property viewership vs US median: 3x

Median days on the market: 60 days

Median days on the market last year: 48 days

Median listing price: $304,900

Savings vs the US median: $95,600

20. Canton, Ohio

Property viewership vs US median: 1.9x

Median days on the market: 52 days

Median days on the market last year: 56 days

Median listing price: $237,075

Savings vs the US median: $163,425

21. New Haven, Connecticut

Property viewership vs US median: 3.1x

Median days on the market: 62 days

Median days on the market last year: 56 days

Median listing price: $439,950

Savings vs the US median: -$39,450

22. Columbus, Ohio

Property viewership vs US median: 2.1x

Median days on the market: 59 days

Median days on the market last year: 55 days

Median listing price: $340,725

Savings vs the US median: $59,775

23. Akron, Ohio

Property viewership vs US median: 2.2x

Median days on the market: 59 days

Median days on the market last year: 53 days

Median listing price: $199,950

Savings vs the US median: $200,550

24. York, Pennsylvania

Property viewership vs US median: 1.6x

Median days on the market: 52 days

Median days on the market last year: 59 days

Median listing price: $357,250

Savings vs the US median: $43,250

25. Waterbury, Connecticut

Property viewership vs US median: 2.8x

Median days on the market: 63 days

Median days on the market last year: 63 days

Median listing price: $375,000

Savings vs the US median: $25,500

26. Ann Arbor, Michigan

Property viewership vs US median: 1.7x

Median days on the market: 54 days

Median days on the market last year: 69 days

Median listing price: $459,495

Savings vs the US median: -$58,995

27. Harrisburg, Pennsylvania

Property viewership vs US median: 1.8x

Median days on the market: 56 days

Median days on the market last year: 54 days

Median listing price: $349,450

Savings vs the US median: $51,050

28. Dayton, Ohio

Property viewership vs US median: 1.8x

Median days on the market: 57 days

Median days on the market last year: 51 days

Median listing price: $228,000

Savings vs the US median: $172,500

29. Allentown, Pennsylvania

Property viewership vs US median: 1.8x

Median days on the market: 58 days

Median days on the market last year: 52 days

Median listing price: $372,450

Savings vs the US median: $28,050

30. Topeka, Kansas

Property viewership vs US median: 1.7x

Median days on the market: 58 days

Median days on the market last year: 57 days

Median listing price: $219,900

Savings vs the US median: $180,600

31. Springfield, Illinois

Property viewership vs US median: 1.9x

Median days on the market: 59 days

Median days on the market last year: 52 days

Median listing price: $173,425

Savings vs the US median: $227,075

• Those who procrastinated on property purchases may be kicking themselves.
• Both mortgage rates and home values have risen in the past year.
• However, there are 16 US markets where prices are below the median and falling.

Although aspiring homeowners may have thought it was smart to put off purchases last year, that decision seems to have backfired.

Home affordability was challenged again in 2024, which real-estate analyst Ivy Zelman said was the toughest year for first-time buyers in four decades.

Mortgage rates are even more restrictive now than they were 12 months ago. Thirty-year fixed rates are at 6.9%, up from 6.6% last February and far higher than the late-September lows of 6.1%, while 15-year rates are at 6.1% compared to 5.9% at this time in 2024.

Home values have also risen substantially in that span. The going rate for existing single-family homes in the fourth quarter was $410,100, which was 4.8% higher than the year prior — though it's modestly lower than the peak of $422,100 in the second quarter.

Property price appreciation has been widespread. Last quarter, home prices were up in 89% of the 226 US markets tracked by the National Association of Realtors, the firm revealed in a February 6 report. And 14% of US cities saw sale values rise at a double-digit pace, which was twice the rate of the prior quarter. Only 23 cities saw prices head in buyers' direction.

Buyers hoping to settle down in the Northeast or Midwest may be most frustrated. Prices rose 10.6% and 8%, respectively, in those regions, versus 4% in the West and 2.1% in the South.

In the last five years, mortgage rates have almost exactly doubled from just under 3.5%, and median property prices are up 49.9%, according to the NAR. Home values will almost certainly never fall that far again, and it's unlikely that mortgage rates get back there anytime soon.

That's especially tough news for those who want to build home equity sooner rather than later.

"Renters who are looking to transition into homeownership face significant hurdles," said Lawrence Yun, the NAR's chief economist, in a statement for his firm's quarterly housing report.

16 top cities for buyers on a budget

Even in this challenging market, there are some silver linings for buyers.

Home affordability might not be spiraling, according to the NAR, which found that monthly mortgage payments were actually down for existing homes on 20% down payments. The firm said the typical rate was $2,124, which is 1.7% lower than in late 2023 and 0.8% less than in Q3. Owners also put less than 25% of their income toward mortgages — just below past levels.

Another promising sign is that there are several markets where houses are both cheaper than the national median and falling on a year-over-year basis.

Below are those metropolitan areas along with their yearly change and price history, with median sale values for every quarter of 2024, the projected level for 2024 as a whole, and the median value for the fourth quarter of 2023.

1. Punta Gorda, Florida

Year-over-year price change: -5.7%

Median home price in Q4 2024: $350,000

Median home price in Q3 2024: $350,000

Median home price in Q2 2024: $380,000

Median home price in Q1 2024: $379,800

Projected home price throughout 2024: $364,000

Median home price in Q4 2023: $371,000

2. Greenville, South Carolina

Year-over-year price change: -5.6%

Median home price in Q4 2024: $332,200

Median home price in Q3 2024: $341,500

Median home price in Q2 2024: $338,800

Median home price in Q1 2024: $326,900

Projected home price throughout 2024: $335,500

Median home price in Q4 2023: $351,800

3. Glens Falls, New York

Year-over-year price change: -4.7%

Median home price in Q4 2024: $265,400

Median home price in Q3 2024: $279,500

Median home price in Q2 2024: $270,100

Median home price in Q1 2024: $236,200

Projected home price throughout 2024: $266,800

Median home price in Q4 2023: $278,400

4. Spartanburg, South Carolina

Year-over-year price change: -2.7%

Median home price in Q4 2024: $286,500

Median home price in Q3 2024: $297,700

Median home price in Q2 2024: $298,300

Median home price in Q1 2024: $292,700

Projected home price throughout 2024: $293,800

Median home price in Q4 2023: $294,600

5. Cape Coral/Fort Myers, Florida

Year-over-year price change: -2.6%

Median home price in Q4 2024: $214,100

Median home price in Q3 2024: $229,000

Median home price in Q2 2024: $249,100

Median home price in Q1 2024: $205,100

Projected home price throughout 2024: $224,100

Median home price in Q4 2023: $219,800

6. Bowling Green, Kentucky

Year-over-year price change: -2.4%

Median home price in Q4 2024: $277,100

Median home price in Q3 2024: $282,300

Median home price in Q2 2024: $277,500

Median home price in Q1 2024: $267,200

Projected home price throughout 2024: $276,300

Median home price in Q4 2023: $283,900

7. Lakeland, Florida

Year-over-year price change: -2.4%

Median home price in Q4 2024: $327,400

Median home price in Q3 2024: $329,900

Median home price in Q2 2024: $335,000

Median home price in Q1 2024: $333,300

Projected home price throughout 2024: $330,200

Median home price in Q4 2023: $335,600

8. Wichita Falls, Texas

Year-over-year price change: -2.4%

Median home price in Q4 2024: $192,200

Median home price in Q3 2024: $186,500

Median home price in Q2 2024: $201,800

Median home price in Q1 2024: $188,900

Projected home price throughout 2024: $192,400

Median home price in Q4 2023: $196,900

9. Lubbock, Texas

Year-over-year price change: -2.2%

Median home price in Q4 2024: $225,100

Median home price in Q3 2024: $234,900

Median home price in Q2 2024: $234,900

Median home price in Q1 2024: $230,400

Projected home price throughout 2024: $231,900

Median home price in Q4 2023: $230,100

10. Sherman, Texas

Year-over-year price change: -1.9%

Median home price in Q4 2024: $279,800

Median home price in Q3 2024: $305,300

Median home price in Q2 2024: $290,900

Median home price in Q1 2024: $284,600

Projected home price throughout 2024: $290,100

Median home price in Q4 2023: $285,200

11. Corpus Christi, Texas

Year-over-year price change: -1.3%

Median home price in Q4 2024: $272,600

Median home price in Q3 2024: $278,000

Median home price in Q2 2024: $282,400

Median home price in Q1 2024: $266,600

Projected home price throughout 2024: $275,300

Median home price in Q4 2023: $276,300

12. Tampa/St. Petersburg/Clearwater, Florida

Year-over-year price change: -1%

Median home price in Q4 2024: $406,000

Median home price in Q3 2024: $410,000

Median home price in Q2 2024: $420,000

Median home price in Q1 2024: $405,200

Projected home price throughout 2024: $412,500

Median home price in Q4 2023: $410,000

13. Huntsville, Alabama

Year-over-year price change: -0.9%

Median home price in Q4 2024: $330,500

Median home price in Q3 2024: $326,200

Median home price in Q2 2024: $325,300

Median home price in Q1 2024: $313,900

Projected home price throughout 2024: $324,000

Median home price in Q4 2023: $333,500

14. Anniston, Alabama

Year-over-year price change: -0.8%

Median home price in Q4 2024: $187,400

Median home price in Q3 2024: $189,300

Median home price in Q2 2024: $185,300

Median home price in Q1 2024: $179,100

Projected home price throughout 2024: $185,600

Median home price in Q4 2023: $188,900

15. Deltona/Daytona Beach, Florida

Year-over-year price change: -0.8%

Median home price in Q4 2024: $359,500

Median home price in Q3 2024: $355,000

Median home price in Q2 2024: $365,000

Median home price in Q1 2024: $360,000

Projected home price throughout 2024: $360,000

Median home price in Q4 2023: $362,400

16. San Antonio, Texas

Year-over-year price change: -0.4%

Median home price in Q4 2024: $314,500

Median home price in Q3 2024: $321,100

Median home price in Q2 2024: $321,800

Median home price in Q1 2024: $305,800

Projected home price throughout 2024: $316,400

Median home price in Q4 2023: $315,700

• It's never been tougher for first-time homebuyers to break into the market.
• Supply shortages, high mortgage rates, and skyrocketing prices are creating barriers to entry.
• Prospective homebuyers are downsizing, house hacking, or buying fixer-uppers as a result.

It might seem cliché to reminisce about the good old days, but when it comes to the housing market, things arguably were better "back then."

In the 1940s, for example, there was an ample supply of reasonably priced starter homes for first-time homebuyers. A starter home during that time typically cost between $8,000 and $12,000, or between $109,000 to $168,000 in today's dollars, according to Realtor.com.

Fast forward to today, where affordable new home construction has declined, mortgage rates are stubbornly above 6%, and the average home costs $357,469, according to Zillow data. It's no wonder that the share of first-time homebuyers in the market has shrunk to a historic low of 24%, while the age of first-time buyers has hit a record high of 38 years, according to the National Association of Realtors.

"There are a lot of financial barriers to entry for younger households," Danielle Hale, chief economist at Realtor.com, said in an interview. "As a result, we see fewer first-time home buyers. They are a smaller share of the market, and the number of home sales has been historically low in recent years."

Despite the tough times, there are some positive inklings for the housing market heading into next year: lower interest rates and increased inventory could be on the horizon in 2025. Still, housing experts are unsure if the market will significantly improve for first-time buyers in the near future.

In the meantime, first-time homebuyers seem to be making the most out of the circumstances and are getting creative with the following three homebuying habits.

Starting small

One of the most straightforward ways that homebuyers are reducing costs is by buying a smaller house. That's how Symone', a 32-year-old user-experience content designer who asked not to share her last name for privacy reasons, was able to purchase her first home in 2024: a two-bedroom, 1,300-square-foot single-family home in the Raleigh, North Carolina metro area.

Buying a house in one of the most popular real estate markets in the country wasn't a walk in the park for Symone'. Competition was fierce and inventory was limited, making it difficult to find affordable units, Symone' told BI.

"I would go to sleep basically on my phone, scrolling on Zillow trying to find something," she said.

Her biggest takeaway from the homebuying process was that she wouldn't get everything on her wish list. Symone' prioritized the urban location and made concessions on the size — her house is much smaller than the median American home size of 2,000 plus square feet, according to Bankrate.

"That's where I compromised on this house. I love it because it's a new build, and it has all the finishes that I wanted, but I definitely don't have as much storage in this house," Symone' said.

House hacking

When Tom Brickman bought his first house, he lived in the upstairs unit and rented out the downstairs unit to a tenant.

That was back in 2009, but house hacking, or renting out part of your home, has only increased in popularity as a way for first-time homeowners to get their foot in the door. The extra income from rent can help the owner pay off the mortgage on the house and build up home equity.

"I think it's definitely gained more popularity as things continue to get more and more expensive," Brickman said.

Danny Gardner, senior vice president of Mission and Community Engagement at Freddie Mac, agrees. Gardner believes that increasing living costs are leading people to become more open to nontraditional home ownership options such as sharing space.

In the twenty-plus years since Brickman's first home purchase, he's gone on to buy more houses and become a successful real-estate investor who provides coaching services to new homeowners. House hacking with two tenants was how one of Brickman's clients was able to afford a condo while working as a server in Los Angeles.

House hacking can provide a point of entry into the market, especially for otherwise prohibitively expensive markets such as Los Angeles, but Brickman cautions that it's not for everyone. Cohabiting with a tenant can create complications: when Brickman first started out, he encountered lifestyle conflicts with his downstairs neighbor and had to scramble for money to fix a broken furnace.

"It's inconvenient," Brickman said of house hacking, "but I could afford a much nicer house by doing that."

Buying a fixer-upper

Another way first-time homebuyers are combatting the rising cost of housing is by buying fixer-uppers. These houses are often available at below-market prices and can be a great deal — if you're willing to put in the work and money to invest in renovating.

According to Hale, fewer affordable starter homes are being built as builders have trended towards constructing larger, more expensive homes in recent years.

As a result, those looking to buy an accessible first-time home might not have a lot of new options to choose from.

"A lot of lower-priced homes are lower priced because they're older and could require work," Hale said.

Prospective homeowners might choose a fixer-upper due to lower competition. Brickman went this route a few years ago.

"I was just tired of getting outbid, so I took a house that needed more work than what it was needed," Brickman said of his experience buying a fixer-upper in 2022.

However, the lower price of a fixer-upper can come at the cost of the convenience of a new build, as it's difficult to accurately predict costs no matter how diligently you budget. Another one of Brickman's clients was hit with thousands of dollars of unexpected costs on a fixer-upper after an initial inspection failed to catch an issue with a retaining wall on the property.

The housing landscape is undoubtedly tough to navigate today, but until affordability improves, prospective homeowners are coming up with workarounds to get a piece of the American dream.

"Sometimes you have to get a little creative to get your foot in the door," Brickman said.

• Realtor.com forecasts that home prices will rise slightly in 2025.
• Researchers expect mortgage rates to come down next year but still remain above 6%.
• There's a silver lining: Increased inventory and new construction may offer buyers some relief.

The housing market in 2024 hasn't been kind to those looking for a home: The age of the typical first-time homebuyer increased by three years, mortgage rates stayed firmly above 6%, and some people felt it would be more affordable to keep renting than to buy.

Although Realtor.com's housing forecast predicts some of the same for 2025, there are a few encouraging signs.

Home affordability has improved modestly after reaching the lowest level in decades last year, and transactions have picked up after an eerily quiet 2023.

Danielle Hale, the chief economist at the real-estate listings and data site, said a "Trump bump" could affect the housing market.

"For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors," Hale said in the forecast. "The new administration's policies have the potential to enhance or hamper the housing recovery, and the details will matter."

Most consumers care about what will happen to home prices and mortgage rates, which directly affect their ability to buy a house.

With that in mind, here are five predictions for the housing market in 2025 from Realtor.com.

1. Home prices will drift higher

The median home sale price nationwide is up 32% since 2019, per the Federal Reserve Bank of St. Louis. However, it was $420,400 in the third quarter of 2024, down a bit from $435,400 a year earlier.

Buyers are holding out for more relief, but it might not come in 2025.

Barring a serious shock, home prices should continue to climb modestly. Realtor.com predicts that home sale prices will increase by 3.7% in 2025, which would be about a $15,000 jump.

"Prices are going to keep rising because we're not going to have a recession," Ralph McLaughlin, a senior economist at Realtor.com, said in an interview with Business Insider. "If you look at the times that home prices fall, it's typically only when there's a recession, and only when people are forced to sell."

Higher home prices may cause buyers to expand their house hunts to more affordable parts of their states or the country, like the Sunbelt. Twelve of the 16 cities that Realtor.com thinks will have double-digit price appreciation in 2025 are in the Southeast or Southwest.

2. Mortgage rates will stay above 6%

The average 30-year mortgage rate has dipped slightly, to 6.7% from a peak of 7.8% a year ago. Rates dropped to a historically low mark of 2.7% in 2021 and have mostly climbed since then. A pair of interest-rate cuts haven't significantly affected mortgage rates.

Next year's economy will be typified by lower interest rates and steady growth, Realtor.com predicted. The firm expects a rate cut in December and then a few more in early 2025.

That means Realtor.com researchers don't expect mortgage rates to drop dramatically next year, projecting that the 30-year will stay above the 6% threshold and be at 6.2% by the end of 2025.

3. Rents will be roughly the same

Rent growth may stall, as Realtor.com expects US apartment prices to fall 0.1%.

That's largely thanks to a major increase in rental unit inventory. Real-estate site Zumper found that the supply of new apartments in the US hit its highest level in five decades this summer.

"What we've seen over the past couple years is a large uptick in new multi-family construction, and they tend to be released all at once," McLaughlin said. "And so it can have very sharp and especially isolated impacts on rents — in particular — in urban areas where they are built."

Construction trends suggest the rental stock should increase in all parts of the country, but especially in the South, Realtor.com said. New homes and apartments could lead to lower rents in some cities and states.

Landlords may also struggle to raise rent substantially in a strong economy with lower mortgage rates, since renters could walk away from bidding wars and look at buying homes instead.

"When incomes grow enough in the rental segment, those renters tend to convert over to owners," McLaughlin said. "They typically won't use their incomes to bid up rents more — they'll just go and, if they can afford it, they'll go buy a house."

McLaughlin added: "Those that continue to stay renting, landlords don't have the ability necessarily to raise rents at the rates that price growth plays out in most markets."

Still, inventory increases may not translate to meaningful discounts on homes or rental units. Prices almost always rise over time along with the population size and money supply, so while apartments may be easier to find, those pining for pre-pandemic prices could be disappointed.

4. The market will be high on housing supply

Next year's housing market may be marked by sizable increases in home and apartment supply.

An 11.7% jump in existing home inventory and a 13.8% surge in single-family home starts will usher in the first "balanced" housing market in nine years, Realtor.com predicted. That would mean neither buyers nor sellers will have disproportionate leverage in 2025.

New single-family homes are expected to reach 1.1 million, the most since 2006. That should give prospective buyers more chances to score a home.

"While more inventory means buyers will likely have more time to make purchase decisions in 2025, in any market, a fast-acting buyer will have a higher likelihood of making the winning offer," Hale said in the report.

Homes have been in short supply for decades. Despite an uptick in construction, Freddie Mac estimated that the US needed 3.7 million more units to offset the shortage, as of last quarter.

Continued supply improvements mean there should be 4.1 months of homes available in 2025, up from 3.7 months now, Realtor.com said. The National Association of Realtors, a competing firm, reported last month that there was already 4.2 months' supply of existing homes available.

5. Home sales will surge

The housing boom during the pandemic devolved into a bust in 2022 and 2023 — a year in which home transactions reached their lowest levels in decades as housing affordability tanked.

Buyers and sellers are holding out for lower rates, and in the meantime, sales have stagnated.

"What I say to agents very often is, 'We're in a recession of transactions,' which is a different situation than the rest of the economy," Leo Pareja, the CEO of real-estate brokerage giant eXp Realty, said in a recent interview with Business Insider.

Many would-be buyers have been priced out of the market, while those hoping to move were reluctant to sacrifice their modest mortgages. In fact, about 84% of US mortgages are at rates below 5%, Pareja said. For that reason, many baby boomers have held onto their homes, giving younger buyers fewer options.

"If you're locked in at a 3.5% rate — even if you found your dream home, swapping that for a 6.8% rate is virtually impossible," Pareja said.

Lower mortgage rates and higher supply should spark a turnaround for home transactions. Pareja and his colleagues at eXp see sales activity rising 10% next year — far above Realtor.com's 1.5% forecast.

While the housing market overall may still favor sellers, more homes for sale can help buyers secure better deals and more concessions.

President-elect Donald Trump's policies may also be a tailwind for sales activity. Stock-market strategists mostly agree that tax cuts and deregulation will boost business confidence, and McLaughlin suspects that could rub off on homebuyers.

"If you're talking about the resale market, the existing-homes market, it's hard not to become optimistic about just the broader economy, because of things like tax cuts and other benefits to households that might put more money in their pocket at the end of the day," McLaughlin said.

He added, "That might encourage them to go out and either buy a home if they don't currently own one — or grade up to a house maybe they've been waiting to over the last few years."