Homebuyers are gaining power in much of the country. Just not in the wealthy, pricey East Coast.
Consensus is growing among economists that home prices will flatline or even fall on a national level in 2025 as the housing market spends a third year stuck in a deep slump. But those national trends mask a housing market that looks increasingly fractured, with prices rising in many cities in the Northeast and Midwest, and falling in parts of the Southeast and Mountain West.
In the stretch of cities between Richmond, Va., and Portland, Maine, homes are still selling at almost as frenetic a pace as they were when mortgage rates were 3%. Lack of supply remains a major issue: For-sale inventory has risen but hasn’t recovered to anywhere near pre-pandemic levels, making bidding wars commonplace and keeping home price appreciation well above national averages.
In the Boston area, Realtor Peter Korthy helped around 10 sets of buyers find homes this spring. Almost all ended up competing against multiple other offers, and waiving contingencies like home inspections remains a common strategy to stand out.
“In Boston, there’s always going to be an imbalance of inventory and potential buyers,” Korthy said. “There are a lot of people with the ability to purchase property, and there’s just not as much available.”
Read more: Is it a good time to sell your house?
Boxing out buyers
In June, housing contract activity droppedin all parts of the country except the Northeast, where it jumped 2.1%, a testament to enduring buyer demand. Home prices are also rising the fastest in that region. They’re up 4.2% in the last year, more than double the 2% national average, according to National Association of Realtors data.
Multiple factors keep the market tilted in sellers’ favor, Korthy said. Boston and its innermost suburbs are dense and relatively built-out, limiting new construction. And the region is a hub for biotechnology, healthcare, and education, full of high earners who have the desire and the means to buy.
At the peak of the spring market this June, there were about 7,700 homes for sale in the Boston region. That’s the highest level since the pandemic, but still far below the more than 11,000 available in June 2019.
It’s a similar situation about an hour west in Worcester County, home to the state’s second-largest city. There, Realtor Jake Boucher of Lamacchia Realty works primarily with first-time buyers, many of whom come in with expectations of a market crash because prices are so high. In July, the median home in the county was listed for $569,450, about 50% more than the pre-pandemic average of about $380,000.
He frequently finds himself explaining that prices are unlikely to drop much unless the area has a flood of new listings, which hasn’t happened. Inventory there is still 44% below pre-pandemic levels, with about 1,200 homes for sale last month. With so few houses to choose from, many prospective buyers struggle to afford what’s available.
“We’re producing the jobs and the economy is strong in Massachusetts,” Boucher said. “It’s just the lack of available housing and the price of housing, which is boxing out so many buyers.”
Leominster, Mass., where Boucher is based, recently ranked No. 3 on Realtor.com’s list of hottest ZIP codes, measured by homes drawing above-average buyer interest and spending below-average time on market. Northeastern cities took four out of the top five spots, with the Boston suburb of Beverly topping the list. Marlton, N.J., a Philadelphia suburb, took second place, while Wayne, N.J., around 20 miles west of Manhattan, ranked fifth.
Zillow’s Market Heat Index, which scores regions numerically based on seller power, is topped by several cities in upstate New York, along with Hartford, Conn., Springfield, Mass., and New York City.
Appreciation continues
For years, Hartford was a relatively sleepy market with slow home price appreciation, but that changed during the pandemic, said David Brooke, founder of the Brooke Team at eXp Realty in Simsbury, Conn.
The metro area has since seen an influx of transplants from nearby states like New York and Massachusetts, and the higher demand has also given longtime residents a buying power boost, as they can sell their homes for hefty profits and use the proceeds to fund large down payments on new homes.
When working with prospective buyers, Brooke counsels them to consider not just what homes have sold for recently, but also price appreciation trends. So far this year, around 70% of homes in Hartford County have sold for over list price, for a median price of $408,250.
“The winning offers are actually bidding to where [the market] is going,” Brooke said.
Read more: 3 tips for selling your home in today’s housing market
Around the time of their wedding last year, Michelle Morera, 29, and Denny Cruz, 32, got pre-approved for a mortgage and began scoping out homes in New York and surrounding states, hoping to remain near the Bronx, N.Y., where they grew up and have family.
But pickings were slim. Even small fixer-uppers were listed at $400,000 and above, and their Realtor advised them that they would likely need to bid above asking price to be competitive.
“Everything ended up being top of our budget,” Cruz said. “We’re looking at houses, and it’s like, the lights need to be updated. Bathrooms need to be updated. If we were looking at the bare minimum for move-in ready, we were maxed out, if not above our budget.”
For now, they’ve slowed their search to focus on saving more toward a down payment and renovation budget, and to spend time with their two-month-old daughter. But they know they’ll soon outgrow the one-bedroom apartment they rent from Morera’s mother in Yonkers, N.Y., and plan to resume their hunt when their daughter starts walking.
“The more money we could save, the better off we are,” Cruz said. “If that means that we have to wait a little bit longer, so be it.”
While sellers remain firmly in control in the Northeast, many agents who spoke with Yahoo Finance said the market is shifting slowly. Higher inventory levels have given buyers more options, and in many cities, homes were staying on the market a few days longer during the peak spring homebuying season than in 2024. That kind of difference at least gave buyers enough time for multiple tours before they put in an offer.
“People weren’t saying, ‘Oh my gosh, there’s only one house to choose from this weekend to go take a look at,’” Brooke said. “There were like, two or three to take a look at.”
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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