Key facts
- Housing markets in lower-priced metros are more resilient than higher-priced ones as demand softens.
- Elevated mortgage rates are impacting overall housing demand, with pending home sales flat year-over-year.
- The most affordable housing segment (under $300,000) is the only price tier avoiding a meaningful decline in absorbed listings.
- Kansas City, Mo., demonstrates strong market activity due to its relative affordability.
- Miami, Fla., shows weakened demand outpacing supply contraction, leading to softer market conditions.
Transaction activity in the U.S. housing market has softened broadly as mortgage rates remain elevated, with national pending home sales showing little year-over-year change and mortgage purchase applications posting negative annual readings. However, metropolitan areas where homes remain affordable are demonstrating greater resilience compared to higher-priced markets.
The most affordable housing segment, priced below $300,000, is the only tier where absorbed listings were essentially flat year-over-year, with inventory increasing by 4.0%. This suggests that supply in this segment is still finding buyers. In contrast, markets with home prices above $650,000 experienced a 10.0% decline in absorbed listings and a 5.4% decrease in inventory, indicating demand has weakened more significantly in these areas.
Kansas City, Mo., serves as an example of a market supported by affordability. Despite a 17.1% increase in active inventory, the market saw an 8.4% rise in absorbed listings and a 10.6% increase in estimated sales, with new pending contracts up 14.5%. The median days on market halved to 28, and the share of listings with price reductions fell from 43.0% to 32.5%, illustrating how new supply is translating into stronger market activity.
Miami, Fla., presents a contrasting scenario. While active inventory contracted by 28.5%, transaction activity slowed even more dramatically, with absorbed listings falling 44.4% and estimated sales down 43.6%. New pending contracts saw a slight decrease of 5.4%. The months of inventory increased from 3.55 to 4.50, suggesting that demand has weakened faster than the available supply, leading to softer market conditions despite fewer homes for sale.
These contrasting market dynamics underscore that while elevated mortgage rates affect all regions, local affordability continues to be the primary determinant of market resilience. Housing professionals are advised to consider not only inventory levels but also the conversion rate of available homes into transactions, which varies significantly by price tier and geography.