• 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.