• Spring is often a good time to sell a house, though that may not hold true in 2025.
• Home supply is rising, and government spending cuts may boost inventory even further.
• Here are 14 cities where prices could fall in the coming months.

Homeowners looking to relocate would normally be in luck as the weather warms up.

Spring usually ushers in the start of the busy season in the US housing market. In fact, a new report from Realtor.com remarked that the single best week to list a home is in mid-April, since median prices and buyer demand are robust, while competition and price cuts are relatively low.

But this year could be completely different — if buyers realize how much leverage they have.

Sellers' bargaining power is waning as steadily surging home inventory puts property prices under pressure, according to an analysis of Realtor.com's data on the 50 largest US markets.

And that's before accounting for the potential fallout from the sweeping budget cuts by the Department of Government Efficiency. Elon Musk, who runs the newly formed DOGE, plans to eliminate government jobs in droves, which could cause a mass exodus from cities like Washington, DC — thereby bringing down home prices in certain markets even further.

Buyers are back in the driver's seat as supply rises

For years, buying a house has been a painful process. Home affordability was in the tank since prices and mortgage rates were uncomfortably high, making ownership unattainable for many. And a widespread home shortage complicated the process for everyone, even wealthier buyers.

However, significant increases in home supply are shaking up the US real-estate market.

Active home listings rocketed 27.5% higher in February, Realtor.com reported late last month. That marked the 16th consecutive month that there were more houses available on a typical day than in the year prior, though supply is still rather stretched relative to pre-pandemic levels.

Similarly, the number of unsold homes — which accounts for those already under contract — had been up by 18.2% from early 2024, which made for the 15th straight month of growth. That includes newly listed homes, which were 4.2% more common compared to last February.

Major inventory improvements have made homes harder to sell. US houses had been for sale for about 66 days in February, versus just over two months last year. Properties have spent more time on the market than the year prior for the past 11 months, Realtor.com noted, and listings lingered longer than last year in 42 of the 50 largest US cities.

More houses on the market means that bidding wars have largely become a pandemic-era relic. Instead, sellers are resorting to price reductions to entice buyers. Nearly 17% of listings in February had received at least one price cut at some point, versus a 14.6% rate a year earlier.

"Sellers are increasingly adjusting to slower market conditions, as the share of homes with price reductions rose significantly last month," Realtor.com researchers Sabrina Speianu and Danielle Hale wrote late last month. "This trend could indicate a potential slowdown in price growth."

Median US home prices slipped 0.8% from last year to $412,000 in February, Realtor.com had found. It's worth noting that values were up 1.2% on a price-per-square-foot basis, suggesting that cheaper, small homes went to market.

Either way, prices aren't moving much, which is a win for hopeful buyers after years of explosive price growth. Even more exciting for them is the idea that home values could decline further.

14 cities where home prices could fall after Elon Musk's cuts

If DOGE's cuts to the federal government's workforce are as widespread as Musk would like, tens of thousands of employees may be looking for new places to live. Home listings could balloon in cities brimming with government workers, which could deflate their values.

This dynamic doesn't seem to be swaying home prices yet, Realtor.com's economic researchers said, noting that there isn't a discernable difference in prices, price reductions, inventory growth, or time on the market. However, they could certainly see that changing in the coming months.

"Federal workforce reductions could have ripple effects on housing markets with a high concentration of government employees," Speianu and Hale wrote. They added: "The typical home seller takes at least two weeks and often longer to prepare a home for sale, so any real impact is likely ahead."

Below are the 14 US cities where federal government employees make up at least 2% of the workforce, meaning their housing markets are most in danger of being shaken up by DOGE. Note that only the 50 largest markets tracked by Realtor.com were included in this analysis.

Along with each location its median listing price in February, its year-over-year price growth in aggregate and on a per-square-foot basis, its listing price growth since the start of this year, and the percentage of federal government employees as a share of its working population.

1. Washington, DC

Median listing price: $579,995

Median listing price growth: -3.3%

Median listing price per square foot growth: 0%

Listing price growth since Jan. 1: 7%; $40,000

Federal government employees as a share of workers: 11%

2. Virginia Beach, Virginia

Median listing price: $392,500

Median listing price growth: 1.4%

Median listing price per square foot growth: 5.4%

Listing price growth since Jan. 1: 6.4%; $25,000

Federal government employees as a share of workers: 7%

3. Oklahoma City

Median listing price: $314,992

Median listing price growth: -2.6%

Median listing price per square foot growth: 1.3%

Listing price growth since Jan. 1: 4.9%; $16,000

Federal government employees as a share of workers: 4.2%

4. Baltimore

Median listing price: $350,000

Median listing price growth: 6.2%

Median listing price per square foot growth: 2%

Listing price growth since Jan. 1: 5.8%; $20,000

Federal government employees as a share of workers: 3.7%

5. San Diego

Median listing price: $949,995

Median listing price growth: -4.7%

Median listing price per square foot growth: -2%

Listing price growth since Jan. 1: 5.9%; $56,000

Federal government employees as a share of workers: 3.1%

6. San Antonio

Median listing price: $327,000

Median listing price growth: -2.4%

Median listing price per square foot growth: -2.1%

Listing price growth since Jan. 1: 4.8%; $16,000

Federal government employees as a share of workers: 3%

7. Memphis, Tennessee

Median listing price: $328,050

Median listing price growth: 1.3%

Median listing price per square foot growth: 2.7%

Listing price growth since Jan. 1: 9.4%; $31,000

Federal government employees as a share of workers: 2.8%

8. Tucson, Arizona

Median listing price: $396,200

Median listing price growth: -1%

Median listing price per square foot growth: -1.2%

Listing price growth since Jan. 1: 7.4%; $29,000

Federal government employees as a share of workers: 2.8%

9. Richmond, Virginia

Median listing price: $429,653

Median listing price growth: -4.2%

Median listing price per square foot growth: 2.3%

Listing price growth since Jan. 1: 4.6%; $20,000

Federal government employees as a share of workers: 2.7%

10. Kansas City, Missouri/Kansas

Median listing price: $379,450

Median listing price growth: -9.9%

Median listing price per square foot growth: -0.9%

Listing price growth since Jan. 1: 7.4%; $28,000

Federal government employees as a share of workers: 2.6%

11. Jacksonville, Florida

Median listing price: $388,098

Median listing price growth: -5.3%

Median listing price per square foot growth: -3.3%

Listing price growth since Jan. 1: 7.6%; $29,000

Federal government employees as a share of workers: 2.5%

12. Buffalo, New York

Median listing price: $249,974

Median listing price growth: -0.5%

Median listing price per square foot growth: 1.1%

Listing price growth since Jan. 1: 14.8%; $37,000

Federal government employees as a share of workers: 2%

13. Cleveland

Median listing price: $241,725

Median listing price growth: 14%

Median listing price per square foot growth: 14.9%

Listing price growth since Jan. 1: 16.1%; $38,000

Federal government employees as a share of workers: 2%

14. Tampa, Florida

Median listing price: $399,000

Median listing price growth: -4%

Median listing price per square foot growth: -4%

Listing price growth since Jan. 1: 6.5%; $26,000

Federal government employees as a share of workers: 2%

• 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

• Last year's housing market was the least affordable since the mid-1980s.
• Near-record prices and elevated mortgage rates kept many buyers out of the market.
• But leading real-estate analyst Ivy Zelman sees a massive silver lining for buyers.

Homebuyers have found a much-needed ally in this historically unaffordable housing market: homebuilders.

The housing market was flipped upside down in late 2022 as mortgage rates spiked to some of the highest levels in two decades in response to multi-decade-high inflation.

Higher borrowing costs combined with lofty property prices made buying an entry-level house last year the hardest since 1984, according to data from Zelman & Associates.

Those challenging conditions have seemingly made it impractical or impossible for millions of potential buyers to move. In turn, home sales have dried up, which is disappointing for hopeful homeowners, frustrating for sellers looking to relocate, and a headache for builders.

Homebuyers have an unlikely hero

Fortunately, it looks like there's a creative yet common-sense solution hiding in plain sight.

Homebuilders are increasingly bearing buyers' burdens when it comes to borrowing costs, real-estate analyst Ivy Zelman said in a recent interview with Business Insider.

Buyers are taking advantage of special offers from builders that bring their mortgage rate down from around 7% to 4% or 5%, Zelman explained. These so-called buydowns are a huge relief for buyers and can make the difference between deciding to close a deal and continuing to rent.

Zelman estimates that buydowns are now in place on the majority of entry-level home sales.

"Buydowns have been something — a tool — that builders have used historically," Zelman said. "So it's not a new phenomenon. But the magnitude of it, I'd say, is probably the most they've ever used it."

Builders would rather not buy down mortgage rates since doing so eats into their profit margins.

Business Insider analyzed the operating margins of five top homebuilders and found that all have fallen or flatlined since early 2022 — except for luxury homebuilder Toll Brothers. Although Toll Brothers also has buydown offers, it focuses on well-to-do buyers who may not need them. (Higher material costs likely also hurt margins, judging by how new home prices have peaked.)

But Zelman said it's even worse for builders to be stuck with tons of new homes they can't sell.

"For the near term, their philosophy is that 'it's driving our absorptions, we're gaining share at the expense of existing homes' — and they're going to keep doing it," Zelman said.

To that point, Zelman said the CEO of a major homebuilder told her last fall at a conference her firm hosted that subsidizing mortgage rates or providing other perks, like upgraded appliances, had become "a cost of doing business." Otherwise, there's a chance that home sales would wilt.

"Without those incentives, they would definitely not be seeing volume growth or even hopes of any absorption," Zelman said. "It would be a very ugly market if they hadn't been prudent in starting to accelerate buydowns in, really, the second half of '22."

After years of hardship, the future looks brighter for buyers

Buydowns are a rare silver lining for buyers and a workable stop-gap solution for builders, especially if borrowing costs don't budge anytime soon.

It's fair to wonder whether the abundance of buydowns is merely a product of this high-rate backdrop, given how they're correlated with lower operating margins for builders. When mortgage rates eventually fall, Zelman had thought builders would back away from these offers.

But after further review, Zelman now suspects that buydowns have long-term staying power.

"'We are not going to get off of it,'" Zelman said she was told by the CEO of a homebuilder in reference to buydowns. "He goes, 'Maybe the buydowns won't be as expensive if rates come down, but if anything, it gives us a competitive advantage against the existing market.'"

That stance may be a necessary one. Existing homes offer stiff competition on the pricing front, as their median sale price of $404,400 is well under the going rate of $427,000 for new units.

However, Zelman's firm expects new home prices to tick up by just 1% this year before a 2% jump in 2026, compared to increases of about 3% for existing homes. That relatively soft growth should help spark sales growth of 5%, in Zelman's view.

• A sizable uptick in home inventory has brought down prices, giving buyers leverage.
• Fierce bidding wars that were common during the pandemic may be over for now.
• Here are 14 top US cities for buyers as 2025 begins, according to Realtor.com.

A slow year in the US housing market ended on a high note for buyers, and they might have even more luck landing new homes in the new year.

Property prices slid again in December in a less competitive market with steadily rising supply, according to Realtor.com's final housing market report for 2024, which was released in early January.

Median single-family home prices were 1.8% lower last month than the year prior at a going rate of $402,502, the firm found. The median price per square foot did rise by 1.3% year-over-year, though researchers said that was largely because buyers targeted smaller, cheaper houses.

Those declines stem from a long-awaited surge in home supply. Property listings were up for the 14th month and by 22% over last December. The number of unsold houses, including those under contract, also jumped for the 12th consecutive month and by 17.5% from 2023.

Supply has risen, but not everything is rosy

But while buyers got the lower prices they'd hoped for, many still didn't sign on the bottom line.

December was the quietest month on the housing front in nearly two years. The typical home was on sale for 70 days, compared to 62 days in November and 61 days in late 2023.

The slump coincided with a recent surge in mortgage rates, which just reached levels not seen since July. Higher borrowing costs are a major barrier for many buyers, and they've also deterred would-be sellers who are reluctant to trade in inexpensive mortgages for costlier ones. And when lofty mortgage rates cap what buyers can spend, sellers are stuck with weaker offers.

"With higher rates taking a bite out of homebuying power, fewer new sellers are coming to the market this winter compared with this past fall," Realtor.com's Ralph McLaughlin wrote in the January 2 report.

That's not to say there's a sales drought, as pending listings were 7.4% higher last month than a year earlier. Still, homes under contract had risen 14.7% in November before the latest spike in mortgage rates, which suggests that losses in home affordability are hurting the market.

While rates are a headwind, Realtor.com's economists are still calling for sales growth this year. However, the firm's forecast is for 1.5% growth, which is far less than optimists have predicted.

"Though rates are significantly higher today than they were just a few months ago, our 2025 forecast shows that as both lower rates and time chisel away at the 'lock-in' effect that has held back sales this year, we should expect home sales to rise modestly by 1.5% in 2025," McLaughlin wrote.

14 cities that favor buyers

Those who made buying a house a New Year's resolution might not have as much trouble as they would have a year or two ago, though they'll still need to look in the right places.

Home inventory increased last month across all four US regions and in all but one of the nation's 50 largest metropolitan areas, but there were still massive discrepancies. For example, the South and West saw supply rise by roughly 25% versus about 7% in the Northeast.

Since buyers have more options, there isn't as much pressure on them to bite on deals. In turn, homes were for sale for longer in 92% of major markets last month. That stalemate drove 12.9% of sellers to cut their asking prices, which was slightly higher than the 12.7% in December 2023.

To help buyers secure deals, Business Insider reviewed Realtor.com's latest housing data and found 14 large US metro areas that had lower prices and listing growth of at least 10%. Below are those cities and their median listing price, price growth on an overall and per-square-foot basis, active listing growth, share of homes with reduced prices, and the growth in that metric.

1. Atlanta, Georgia

Median listing price: $399,950

Median listing price growth: -3.6%

Median listing price per square foot growth: -0.6%

Active listing growth: 38.3%

Price-reduced share: 16.2%

Price-reduced share growth: 3.2 percentage points

2. Austin, Texas

Median listing price: $498,500

Median listing price growth: -7.7%

Median listing price per square foot growth: -5.3%

Active listing growth: 13%

Price-reduced share: 16.1%

Price-reduced share growth: -3.9 percentage points

3. Dallas, Texas

Median listing price: $422,450

Median listing price growth: -2.9%

Median listing price per square foot growth: -0.3%

Active listing growth: 31.1%

Price-reduced share: 17.4%

Price-reduced share growth: 0 percentage points

4. Denver, Colorado

Median listing price: $577,350

Median listing price growth: -5.4%

Median listing price per square foot growth: -1.1%

Active listing growth: 41.9%

Price-reduced share: 24.1%

Price-reduced share growth: 11.5 percentage points

5. Jacksonville, Florida

Median listing price: $384,500

Median listing price growth: -5.7%

Median listing price per square foot growth: -2.2%

Active listing growth: 36.8%

Price-reduced share: 17.9%

Price-reduced share growth: 2.9 percentage points

6. Kansas City, Missouri/Kansas

Median listing price: $369,995

Median listing price growth: -7.5%

Median listing price per square foot growth: -1.2%

Active listing growth: 12.2%

Price-reduced share: 11.6%

Price-reduced share growth: 1.7 percentage points

7. Miami, Florida

Median listing price: $522,500

Median listing price growth: -9.9%

Median listing price per square foot growth: -6.6%

Active listing growth: 45.4%

Price-reduced share: 14.7%

Price-reduced share growth: 0.7 percentage points

8. Oklahoma City, Oklahoma

Median listing price: $309,950

Median listing price growth: -3.1%

Median listing price per square foot growth: -0.1%

Active listing growth: 28.4%

Price-reduced share: 15.2%

Price-reduced share growth: -2.6 percentage points

9. Orlando, Florida

Median listing price: $419,950

Median listing price growth: -4.3%

Median listing price per square foot growth: -2.4%

Active listing growth: 42.4%

Price-reduced share: 17%

Price-reduced share growth: 0.4 percentage points

10. Sacramento, California

Median listing price: $615,000

Median listing price growth: -1.6%

Median listing price per square foot growth: -0.5%

Active listing growth: 22.1%

Price-reduced share: 11.8%

Price-reduced share growth: 0.9 percentage points

11. San Antonio, Texas

Median listing price: $329,950

Median listing price growth: -1.7%

Median listing price per square foot growth: -1.9%

Active listing growth: 16.1%

Price-reduced share: 17.7%

Price-reduced share growth: -0.8 percentage points

12. San Diego, California

Median listing price: $964,725

Median listing price growth: -1.6%

Median listing price per square foot growth: -0.5%

Active listing growth: 41.2%

Price-reduced share: 10.9%

Price-reduced share growth: 0.2 percentage points

13. San Francisco, California

Median listing price: $889,500

Median listing price growth: -10.9%

Median listing price per square foot growth: -6.5%

Active listing growth: 14%

Price-reduced share: 7.9%

Price-reduced share growth: 0.4 percentage points

14. Tampa, Florida

Median listing price: $395,000

Median listing price growth: -6%

Median listing price per square foot growth: -5.5%

Active listing growth: 27%

Price-reduced share: 19.6%

Price-reduced share growth: -0.2 percentage points