Active listings and months of supply are crucial indicators of home price momentum. Analysts at LendingOne believe that a rapid increase in active listings can signal potential price weakness as homes take longer to sell. Conversely, a steep decline in active inventory often indicates a heating up housing market as demand absorbs available inventory.

 

What are we seeing today?  

At the end of January 2025, U.S. active inventory still sits below pre-pandemic levels, at 25.3% below what it was in January 2019.

However, national active inventory levels have grown 24.6% year over year, reaching 829,376 in January 2025—a 56% increase from January 2021, when housing inventory hit a historic low. That suggests the housing market has cooled over the past year, giving buyers more leverage in most housing markets. 

Analysts at LendingOne looked over the latest inventory data to better understand what could await real estate investors this spring and summer.

 

LendingOne’s top-line findings: 

  • National housing inventory isn’t high, which puts a floor under national home prices in 2025.
  • Inventory levels in 2025 are higher than the past few years, indicating buyers in many markets—especially in the Sun Belt—have more opportunities than the past few years.
  • Some markets, particularly in the Northeast and Midwest remain very tight, with active inventory levels still a fraction of what they were before the Pandemic Housing Boom.

 

National Active Housing Inventory for Sale

 

 

While some housing markets remain seller-friendly, with active inventory levels more than 50% depleted from six years ago, others have moved toward balance—or even into buyer’s market territory. In particular, some Mountain West and Southern metros have seen their active listings climb substantially. 

 

Among the 100 largest metros

10 metros where active listings in January 2025 were up the most since January 2019: 

  1. Lakeland, FL: +52%
  2. Colorado Springs, CO: +40%
  3. McAllen, TX: +35%
  4. San Antonio, TX: +33%
  5. Spokane, WA: +25%
  6. Cape Coral-Fort Myers, FL: +22%
  7. Memphis, TN-MS-AR: +21%
  8. New Orleans-Metairie, LA: +20%
  9. Denver-Aurora-Centennial, CO: +19%
  10. Orlando-Kissimmee-Sanford, FL: +19%

10 metros where active listings in January 2025 were down the most since January 2019: 

  1. Hartford, CT: -80%
  2. Bridgeport, CT: -80%
  3. New Haven, CT: -72%
  4. Albany, NY: -71%
  5. Providence, RI: -67%
  6. Rochester, NY: -64%
  7. Allentown-Bethlehem-Easton, PA-NJ: -64%
  8. Syracuse, NY: -60%
  9. Worcester, MA: -60%
  10. Portland-South Portland, ME: -58%

 

 

Metro areas where active inventory has grown above pre-pandemic 2019 levels have generally seen home price growth slow, with some even experiencing outright price declines in the past year. For example, in Cape Coral, Florida where the active listing level is 22% higher than it was in January 2019. home prices have fallen -6% year-over-year. 

Meanwhile, the country's tightest housing markets are seeing the strongest price growth. In Hartford, Connecticut—where inventory remains among the lowest—home prices have risen 7% over the past year.

Big Picture: Rising housing inventory in 2025 is giving homebuyers more negotiating power in many markets. However, persistently tight supply in the Midwest and Northeast continues to drive price appreciation in those regions.

During the Pandemic Housing Boom, surging demand fueled by low mortgage rates and remote work flexibility caused active inventory levels to drop sharply nationwide. Builders couldn’t keep up, and active inventory for sale was drained by red-hot demand, leaving markets with historically low supply.

Analysts at LendingOne believe that a key indicator to watch throughout 2025 is regional active inventory levels relative to pre-pandemic levels in 2019. Markets where active inventory is furthest below pre-pandemic levels are likely to remain strong, with sellers retaining the upper hand. Conversely, in markets where active inventory significantly exceeds pre-pandemic levels, housing markets are expected to be softer, with weaker pricing momentum—offering investors and buyers increased leverage.

To identify the nation’s 10 strongest and 10 weakest housing markets of 2025, LendingOne compared current active inventory levels to those of the same month in 2019. The analysis also incorporated year-over-year inventory growth, year-over-year home price shifts, and the three-year change in median days on market. In total, we examined the nation’s 250 largest metro area housing markets.

 

LendingOne’s Topline Findings:

  • A number of small and mid-sized metros in the Northeast and Midwest lead the list of the strongest housing markets in 2025. These markets are driven by persistently low active inventory levels and greater affordability compared to many other regions in the country.
  • In contrast, several Southern markets, including many in Florida and Texas, rank among the weakest and softest housing markets currently, offering homebuyers and investors some leverage. These markets have seen a significant inventory increase and cooling demand.

The 10 Strongest U.S. Housing Markets in 2025

These are the 10 strongest markets to start 2025:

  1. Erie, PA
  2. Rockford, IL 
  3. Bloomington, IL
  4. Manchester, NH
  5. Hartford, CT
  6. Binghamton, NY
  7. Rochester, NY
  8. Norwich, CT
  9. Albany, NY
  10. Atlantic City, NJ

According to LendingOne's analysis, the strongest housing markets in 2025 are characterized by a combination of rising home prices, limited active inventory, and fast property turnover. These qualities signal potential for price appreciation, rental income growth, and sustained market expansion in the coming year. 

Northeastern and Midwestern metros dominate this list. Compared to high-cost coastal or Sunbelt markets, homes in these regions remain more affordable, attracting first-time buyers, downsizers, and remote workers seeking budget-friendly housing. 

Several cities at the top of LendingOne’s ranking fit this description, including Rockford, Illinois, less than 100 miles from Chicago, as well as Hartford and Norwich, Connecticut, and Atlantic City, New Jersey, which serve as commuter hubs for New York City.

A lack of homebuilding in Midwest markets like Rockford, IL, and Northeast markets like Manchester, NH, further contributes to the tightness of these markets. Without significant pressure from homebuilders offering mortgage rate buydowns to boost sales in this affordability-challenged environment, existing home sellers across much of the Northeast and Midwest remain just about the only option for buyers.

 

The 10 Weakest U.S. Housing Markets in 2025

These are the 10 weakest markets to start 2025:

  1. Punta Gorda, FL 
  2. Cape Coral, FL
  3. Huntsville, AL
  4. Lakeland, FL
  5. Killeen, TX
  6. Palm Bay, FL
  7. Lubbock, TX
  8. Colorado Springs, CO
  9. Naples, FL
  10. Ocala, FL

Florida stands out as the home state of many of the weakest markets in 2025. This is largely due to high active inventory levels, as the state is grappling with unabsorbed new supply from a construction frenzy that followed the Pandemic Housing Boom and a pullback in housing demand.

Many Florida markets heavily rely on home buyers who are moving to the region or are purchasing a second home. Sky-high condo HOA fees, rising property taxes, and soaring insurance premiums—exacerbated by a high risk of extreme weather-related damage—have priced out would-be buyers in many markets in Florida. 

Not to mention, Florida’s condo market is feeling the aftereffects of regulations passed following the Surfside condo collapse in 2021.

As a result, home price growth in many Florida housing markets is significantly weaker than a few years ago. Indeed, from November 2023 to November 2024, home prices fell -7.8% and -5.9% in Punta Gorda and Cape Coral respectively, according to LendingOne’s analysis.


Big Picture

The strongest U.S. housing markets heading into 2025 are small and mid-sized metro areas in the Northeast and Midwest, where tight inventory and strong demand drive home price growth. Meanwhile, high inventory levels and cooling demand are weighing down or softening many Southern housing markets.

The 2025 outlook for single-family investors is cautiously optimistic about rental demand, rent growth, price appreciation, but it’s tempered by concerns over rising costs and interest rates. Overall the good news is, investors are more optimistic and plan to purchase more than just last quarter. Single-family rental investors appear poised to navigate these dynamics with a focus on strategic acquisitions and market adaptability.

In this article, you’ll see the full results of our fourth quarter LendingOne-ResiClub Single-Family Rental Investor Survey.

Investors who own at least one single-family investment property were eligible to respond to the LendingOne-ResiClub SFR Investor Survey, fielded between November 14 and November 26. ResiClub, our partner for the survey, is a news and research outlet dedicated to covering the U.S. housing market.

“We have found that clients have resumed making decisions after the election and focused on their acquisition strategies for 2025,” says LendingOne CEO Matthew Neisser. “They are more likely to add to their portfolio compared to last year primarily because they are bullish on rental demand, driven by a continued lack of rental inventory.  As the housing market steadies and for-sale inventory returns to normal levels, we expect more favorable buying opportunities to emerge in some markets. At the same time, investors should temper expectations for outsized rent increases like 2021-22 and focus on sustainable, data-driven investment strategies to maximize long-term returns. 

 

Topline Findings

1. Investor Sentiment and Intent

Purchase Intent:

  • 76% of single-family investors plan to buy at least one property in 2025.

Sale Intent: 

  • 33% of single-family investors plan to sell at least one property in 2025.

Market Outlook:

  • 87% predict strong rental demand in 2025.
  • 76% expect positive home price appreciation in 2025.
  • 40% expect mortgage rates to be below 6% by the end of 2025.

2. Financial Considerations

Rising Costs:

  • 58% of investors were impacted by rising home insurance premiums.
  • 37% identified home insurance as their biggest increased expense in 2024.

Rental Income:

  • 84% plan to raise rents in 2025, with 40% expecting increases over 4%.

3. Regional Trends

  • Southeast and Southwest: These regions experienced the highest impact from rising home insurance premiums.

Investor Confidence Rises 

Back when we surveyed single-family investors in July, when mortgage rates were slightly higher than today, 60% said they were either “very likely” (38%) or “somewhat likely” (22%) to buy over the next 12 months. In our latest survey, fielded late last month, 76% of single-family investors say they are either “very likely” (55%) or “somewhat likely” (21%) to buy at least one investment property in 2025. Simply put, investors are feeling a bit more confident as we approach 2025.

“The survey results highlight both the resilience and adaptability of single-family investors as they look ahead to 2025,” Matthew Neisser continued. “Strong rental demand and mild expectations for rent growth underscore the opportunities in this space, but rising costs—especially insurance—and a divided outlook on mortgage rates remind us that careful planning will be key.”

 

Investment Plans and Strategies

 

How likely single-family rental investors say they are to buy another investment property in the next 12 month

 

How likely single-family rental investors say they are to buy another investment property in calendar year 2025

 

How likely single-family rental investors say they are to sell any of their investment properties in calendar year 2025

 

How single-family rental investors define their primary investment strategy

Market Conditions and Trends

 

How single-family rental investors describe home price momentum in their primary investment market in 2024

 

How single-family rental investors expect home prices to shift in their primary rental markets in calendar year 2025

 

What single-family rental investors expect the average 30-year fixed mortgage rate to be at the end of 2025

 

 

Rental Demand and Pricing

 

How single-family rental investors describe rental demand in their primary investment markets in 2024

 

How single-family rental investors expect rental demand to be in their primary investment markets in 2025

How much single-family rental investors plan to raise rents in calendar year 2025

 

Financial Impact and Expenses

 

How single-family rental investors say rising home insurance premiums impacted their cash flow in 2024

Over the past few years, U.S. housing affordability has significantly worsened. The aftermath of the Pandemic Housing Boom saw home prices soaring, mortgage rates more than doubled, and the cost of repairs, insurance, and property taxes also shot up. That’s all led to fewer people being able to afford to buy homes, and as a result, homeownership has decreased in some markets.

With higher financial barriers to buying a home, in many markets, a larger share of households have turned to renting instead. This bump in rental demand presents potential opportunities for real estate investors, particularly in metros where renting has become more prevalent.

To see which markets are more primed for investor activity, LendingOne analyzed year-over-year changes in the rental share of housing units—or “rentership”— across the 75 largest metros by population.

LendingOne’s Topline Findings:

  • 47 of the largest 75 U.S. metros saw year-over-year growth in their rental share.
  • Renting remains the most popular in the most expensive housing markets, namely San Jose, Los Angeles, and New York City
  • The metro areas that made the biggest year-over-year rental share gains were Toledo, Cape Coral, and Minneapolis. 

Top Five Metros with the Most Rentership Growth Year-Over-Year:  

  1. Toledo, OH (+8.7 percentage points)
  2. Cape Coral-Fort Myers, FL (+8.5 percentage points)
  3. Jacksonville, FL (+7.7 percentage points)
  4. Minneapolis-St. Paul-Bloomington, MN-WI (+7.7 percentage points)
  5. Portland-Vancouver-Hillsboro, OR-WA (+7.0 percentage points)

Annual Shift in the Share of Local Households that are Renters

Population Growth and Housing Trends

In general, most markets see both the number of homeowners and the number of renters increase over time as the overall population ticks up. However, if the pace of renter household formation significantly outpaces owner household formation, then that could indicate a deterioration in home affordability in that region. 

Affordability Pressures in Growing Renter Households

While populations tend to grow across both renters and homeowners, when renter household formation significantly outpaces owner household formation, it signals that home affordability is deteriorating. In metros like Toledo and Cleveland, home prices have outpaced wage growth, making homeownership increasingly difficult. 

In places like Jacksonville and Cape Coral, soaring home insurance premiums and condo HOA fees are pricing out many would-be buyers, causing the share of renters to rise. 

Consistent Trends in High-Rental-Share Metros

Despite these shifts, the metros with the highest rental shares remain largely consistent, reflecting long-standing trends in affordability. The most expensive markets, with limited housing supply, tend to have the highest rental share. Meanwhile, more affordable areas with room for new development typically see lower rentership rates and higher homeownership.

Five metros with the largest rental share in Q3 2024:

  1. San Jose-Sunnyvale-Santa Clara, CA (52.0%)
  2. Los Angeles-Long Beach-Anaheim, CA (50.8%)
  3. New York-Newark-Jersey City, NY-NJ-PA (49.1%)
  4. San Diego-Carlsbad, CA (48.0%)
  5. Fresno, CA (47.4%)

Five metros with the smallest rental share in Q3 2024:

  1. Cape Coral-Fort Myers, FL (21.8%)
  2. Charleston-North Charleston-Summerville, SC (23.7%)
  3. Columbia, SC (24.5%)
  4. Allentown-Bethlehem-Easton, PA-NJ (27.2%)
  5. Detroit-Warren-Dearborn, MI (28.2%)

Share of Local Households that are Renters

Big Picture: As housing affordability conditions worsened over the past few years, the share of renting households has ticked up a bit in some markets, creating opportunities for investors.

If you’re getting started as a real estate investor, you may have heard about the BRRRR method. BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat and is a popular five-step investment strategy.

The BRRRR method involves purchasing distressed or undervalued properties, renovating/rehabbing them, and renting them to tenants. Once rehabbed and rented, the property gains value, which the investor can leverage to refinance, using that money to purchase another property so they can repeat the process.

Let’s dive into each step of the process and talk about the advantages, challenges, and financing options investors should know before getting started.

 

What is the BRRRR Method?

One of the prerequisites to the BRRRR strategy is that the property is purchased below market value. This is an essential component, as you’ll need to build enough equity to recover your original investment quickly.

Here are some points to consider in each step in the BRRRR method:  

Buy

Step 1 in the BRRRR method is Buy. You’ll need to identify a suitable property first. Ideally, it will be one that requires some upgrades but still has desirable qualities that make it worth the investment. Potential is key! A distressed property in a great location is one example, or perhaps a building that’s under foreclosure or bank-owned.

Be sure to conduct a thorough inspection before you commit. A good rule of thumb is not to purchase any property for more than 70% of its post-rehab value. That gives you a 30% buffer for repairs, and you’ll still have enough equity for a refi when you’re done. This is occasionally called the 70% rule or the maximum allowable offer (MAO). MAO is the maximum you can pay upfront and still make a profit.

Other metrics investors typically use to evaluate deals include the after-repair value (ARV). You can estimate this amount by adding the added value from the repair to the purchase price or by looking at similar properties in the area to gauge the fair market value.

So, for example, if your ARV is $750,000, your MAO is $525,000.

Rehab

Once the deal is completed, it is time to start on step 2 of the BRRRR method: rehabbing the property, upgrading, and repairing it so it’s ready for tenants. Upgrades could be purely cosmetic or more extensive, but the ultimate goal is to make it a desirable place to rent. Choose your upgrades based on what will give you the most bang for your buck. Updating bathrooms and kitchens, finishing basements, new paint, and refinishing floors are just a few examples.

Rent

When your property is ready to occupy, you’ll move on to step 3 in the BRRRR process: finding suitable tenants.  Rental income covers your expenses, so do your due diligence to ensure they will make good tenants who will stay long-term. The rent should be enough to cover your mortgage payments with some profit on top of it. Keep your property maintained, be a responsive landlord, and keep the lines of communication open.

Refinance

Once your property is occupied and income-generating, it’s time to refinance. In step 4 of the BRRRR process, you’ll want to use the equity you’ve built in the property as collateral, and pull out of your initial investment plus whatever additional equity there is so you can repeat the process with a new property. You’ll need to have owned the property for a minimum period before you can refinance, replacing the existing mortgage with a new one at more favorable terms. In the case of a cash-out mortgage, the refinanced amount will be more than what’s owed, and you will receive the balance in cash.

Repeat

The fifth and final step in the BRRRR method is to use the funds you received through your refinance to go back to step 1 and start the process over again. The goal is to keep repeating this same strategy as you build out your overall portfolio for more profit and better returns.

 

Advantages of BRRRR for Investors

The BRRRR method is an excellent way for investors to scale their portfolios—as long as the variables are in your favor.

The main benefits of the BRRRR method are:

Requires minimal investment. If the property is undervalued enough and you can do most of the rehab work yourself, there is massive profit potential.

High ROI. Depending on what you paid for the property, there’s excellent potential for generating a high return on your investment over time.

Easily scalable. The steps are easy to follow, and if your first property was a success, you’ll have learned from the process and will know what you’re facing for future investments.

Great passive income potential. If you find great tenants, you’re in a good position to achieve steady cash flow.

Equity building. As you build equity through the rehab process, you could net better interest rates, lower payments, and more buying power that you can leverage into new investments.

 

Challenges of the BRRRR Method

Sometimes, it isn’t so easy to lock into the right circumstances with BRRRR. Here are some of the challenges you could face.

Finding the right property isn’t always easy. The success of your BRRRR strategy hinges on purchasing the right property at the right price. Careful evaluation is essential to ensure your efforts and investment are worthwhile.

It’s speculative. There’s always a chance you won’t find suitable tenants, or the property won’t gain value, putting your investment at risk.

It’s hard work. Managing rental properties isn’t for everyone. It can be extremely time-consuming and stressful, especially with multiple properties or tenants. All the pieces need to be in place to ensure success.

High up-front costs. You’ll need to ensure you can cover the down payment, renovation costs, and operating expenses until the property is income-generating, which could be a barrier for some investors.

 

Financing Options for the BRRRR Strategy

You have a few options for financing your BRRRR strategy, but a fix to rent loan is recommended as it is tailor-made for BRRRR.

Fix to Rent loans are essentially two loans in one. Investors start with a fix and flip loan that covers both the purchase and repair costs of the property. Once the rehab is complete and the investor is ready to rent the property long-term, you have the option to roll into a 30-year fixed-rate rental loan. Working with the same lender when you are ready for the refinance can prove beneficial as they already have your documents on file, you are familiar with your loan advisor, and they may offer incentives for continuing to work with them.

Ultimately, this is a fast and simple solution for investors looking to purchase income properties they intend to own long-term, which goes to the heart of BRRRR. Speak to a loan advisor to see if you qualify for a fix-to-rent loan.

 

Final Thoughts on BRRRR

Real estate investing is an excellent way to build wealth and equity, and the BRRRR method may be what you need to achieve your investment goals. Choosing the right financing partner is critical, as success hinges on the right rates and terms. The qualified lending advisors at LendingOne will work with you to ensure you have the best financing vehicles to get you where you want to be. Contact us today, or take a moment to request a quote. We specialize in real estate investment loans and are here to help. 

This week, LendingOne analysts researched county-level home insurance premium data to determine how premiums vary for homeowners and single-family investors nationwide.

Key Findings: A Surge in Home Insurance Premiums

  • Among the largest 500 U.S. counties, more than half (256) saw their median annual home insurance premiums increase by 25% or more from 2020 to 2023. 
  • Home insurance premiums are highest in coastal Florida counties at-risk for severe climate events
  • Home insurance premiums are the lowest in more affordable regions, such as counties in Pennsylvania and Maine, which also have lower risk for climate-related damage

Counties with the Highest Home Insurance Premiums in 2023

Among the 500 largest counties, these five had the highest median annual insurance premiums in 2023.

  1. Monroe County, FL → $7,608 
  2. New York County, NY → $7,148
  3. Broward County, FL → $5,575
  4. Orleans Parish, LA → $5,546
  5. Miami-Dade County, FL → $5,444

Counties with the Lowest Home Insurance Premiums in 2023

Among the 500 largest counties, these five had the lowest median annual insurance premiums in 2023.

  1. Penobscot County, ME →  $887
  2. Washington County, ME → $898
  3. Erie County, PA → $949
  4. Beaver County, PA → $1,004
  5. Westmoreland County, PA → $1,015

Median Annual Home Insurance Premium in 2023

The Impact of Climate Risk on Home Insurance Premiums

Home insurance premiums tend to be higher in areas prone to climate-related damage. So, it's unsurprising that insurance premiums remain highest along the Southeast coast, where homes can see significant damage from tropical storms and hurricanes.

However, premiums are also high in central states like Oklahoma, Nebraska, Colorado, and Texas, due to damage caused by wind, thunderstorms, wildfires, and tornados. 

Alternatively, rural, more affordable counties with less severe climate risk—mostly across the Midwest and Northeast—see the lowest median annual insurance premiums. 

Pandemic Housing Boom and Insurance Costs

But high insurance costs aren’t just due to climate risk. Home prices and construction costs skyrocketed during the Pandemic Housing Boom, and with them, the cost of home repairs and renovations also rose. This prompted insurance companies to raise premiums to keep up with elevated replacement costs.

LendingOne analysts found that 55 of the nation's 3,000 plus counties saw their median insurance premiums more than 100% in three years. 

Counties with the Largest Premium Increases (2020-2023)

Among the 500 largest counties, these five counties saw their median annual insurance premiums grow the most from 2020 to 2023:

  1. Prince William County, VA: +150.1%
  2. St. Tammany Parish, LA: +117.8%
  3. Cook County MN: +104.8%
  4. Oneida County ID: +95.2%
  5. Calcasieu Parish LA: +90.8%

Change in Median Annual Home Insurance Premium from 2020 to 2023

 

A lot of the biggest jumps in median annual insurance premiums happened in Florida and Louisiana. Those two states have high hurricane risk, of course. 

Big Picture: Home insurance premiums have spiked across much of the country, and in some markets, particularly in Louisiana and Florida, they have cut into single-family landlords' cash flow.

Between 2005 and 2019, the share of single-family homes under construction built expressly for renting rose from 1.9% to 4.5% as the build-to-rent business model slowly gained momentum. Then came the easy-money era during the pandemic, with cash-flush institutional firms looking for ways to deploy capital. By 2023, build-to-rent made up 9.3% of single-family housing starts.

While build-to-rent (BTR) single-family home development still represents a small share of all single-family homes being constructed, more BTR communities continue to pop up across the country.

To find out which markets are at the front of the pack for single-family build-to-rent development, LendingOne analyzed the latest data. 

Our key findings:

  • Build-to-rent is still a growing asset class.
  • Markets in the Sun Belt are driving the bulk of new development.
  • Phoenix and Dallas are the epicenters of the build-to-rent boom.

 

 

Build-to-rent investors want to develop in markets where rental demand will remain strong in the long term, seeking high-growth markets with favorable demographics. Younger generations tend to be the primary demographic for single-family rentals, as many would like to live in a single-family home, but are currently priced out of the purchase market. 

Some Midwestern markets like Columbus are starting to ramp up BTR development.

That said, Sun Belt markets like Phoenix, Atlanta, Orlando, and Southwest Florida are still the big go-tos for BTR developers, due to robust single-family housing demand, sufficient land availability for community development, and their long-term rental outlooks.

 

 

While high interest rates have made investors weary over the past couple of years, there is still significant interest in the build-to-rent market. 

Look no further than single-family landlord giant AMH (American Homes 4 Rent), which back in 2017 formed its own in-house homebuilder to focus on build-to-rent. Of AMH’s nearly 60,000 single-family rentals, 10,000 are build-to-rent units developed from scratch by its in-house homebuilding team. AMH is now the nation’s 39th largest builder and has another 10,000 units in its build-to-rent pipeline

Big Picture: Investor interest in the build-to-rent space remains substantial despite higher interest rates. Build-to-rent single-family rentals continue to pop up across the nation—particularly in the Sun Belt, where the long-term outlook for single-family rentals is strong and there’s room for development.

The Pandemic Housing Boom’s ultra-low interest rates and adoption of work-from-home policies boosted home value growth in essentially every U.S. housing market.

However, in the current housing market—marked by strained housing affordability—it’s a mixed bag across the country. While national home prices are still inching up slightly on a year-over-year basis, some regional markets are experiencing greater growth, while some others are seeing outright declines in year-over-year home values.

To get a sense of how home prices have shifted in the past year across the country, LendingOne analyzed Zillow Home Value Index data to evaluate year-over-year home price growth.

Here are LendingOne’s top-line findings:

  • U.S. home prices are up +3.2% year-over-year, with the strongest growth in California, Midwest, and Northeast markets.
  • From June 2023 to June 2024, home prices softened in many metropolitan areas across Texas, Florida, Louisiana, and Alabama—with some seeing outright price declines.
  • Fueled by the ongoing AI boom, San Jose saw home prices grow 12% year-over-year, the highest among the 50 largest U.S. housing markets.

Among the 50 largest U.S. metropolitan areas::

The metros with the highest year-over-year home price growth were:

  1. San Jose, CA: +12%
  2. Hartford, CT: +10.5%
  3. San Diego, CA: +9.4%
  4. Providence, RI: +7.7%
  5. Los Angeles, CA: +7.6%

The metros with the lowest year-over-year home price growth were: 

  1.  New Orleans, LA: -6.0%
  2.  Austin, TX: -4.7%
  3.  San Antonio, TX: -2.7%
  4.  Dallas, TX: +0.4%
  5.  Minneapolis, MN: +0.4%

It’s worth noting that while Austin and San Antonio are down year-over-year, home prices in those metropolitan areas are still up significantly since before the Pandemic Housing Boom. 

Home prices in the metro areas of Austin and San Antonio in June 2024 were still 46% and 38%, respectively, above June 2019 levels, according to LendingOne’s analysis

Declines could be on the horizon for more Gulf markets like Tampa and Jacksonville. These metros saw very little appreciation this spring and experienced high inventory growth. Now that we’re in a seasonally weaker time of the year, price growth in these areas could turn negative for a period of time. Or what some investors might consider buying opportunities.

Meanwhile, many Midwest, Northeast, and California metros—where resale inventory remains tight—are still seeing above-normal appreciation.

Big Picture: After several years of rapid home price appreciation during the Pandemic Housing Boom, the U.S. has seen modest home price growth over the past year. However, the picture varies significantly across the nation.

Stay informed with our latest news and advice by visiting our blog. And when you’re ready to take the next step, learn how our loan products can help you achieve your investment goals.

LendingOne analyzed Redfin’s most recent quarterly data for investor purchases to better understand what investors are doing in the housing market right now.

LendingOne Topline Findings: 

  • In Q1 2024, the total number of U.S. homes purchased by investors was 47.3% below the levels reached at the height of the Pandemic Housing Boom in Q1 2022.
  • In Q1 2024, the total number of U.S. homes purchased by investors was 0.5% above what investors purchased in Q1 2023.


In 2021, investors took advantage of the Pandemic Housing Boom's favorable buying conditions. Historically low interest rates, stimulus policies, and the shift to remote work boosted investor purchases of homes across the U.S. In metros like Sacramento, Jacksonville, and Atlanta, investor home purchases more than doubled from pre-pandemic levels. 

However, this frenzy fizzled out once the average 30-year fixed mortgage rate jumped above 6.0% in summer 2022. The higher rates meant that far fewer homes for sale could generate the returns that everyone from small landlords to larger institutions were seeking. This led to a significant slowdown in investor purchasing activity. Nationally, investor home purchases fell from 83,468 at the peak in Q1 2022 to 43,969 in Q1 2024—a 47% drop. 

While total investor purchases are still well below levels seen during the frenzy, the deceleration has let up. Indeed, investors' purchases in Q1 2024 (43,969) were just a hair higher than the number of U.S. homes investors purchased in Q1 2023 (43,753). And some West Coast markets, where investors had pulled back sharply following the rate shock, have started to see some investors return to the market.

 

 

Investor trends vary a lot by market. Among the 40 major metros that Redfin tracks, 18 saw a drop in investor home purchases from Q1 2023 to Q1 2024, while 22 saw a jump. 

These five metros saw the most investor home purchase growth year-over-year:  

  • San Jose (+28.0%)
  • Oakland (+22.1%)
  • Minneapolis (+21.7%)
  • Sacramento (+20.2%)
  • San Francisco (+18.6%)

These five metros saw the least investor home purchase growth year-over-year: 

  • Cincinnati (-22.1%), 
  • Baltimore (-22.0%) 
  • Providence (-20.2%), 
  • Virginia Beach (-15.1%)
  • Chicago (-14.6%) 

While California markets have seen year-over-year growth in investor purchases in the past year, they are still among the markets with the least total investor activity. The reason is that it’s still hard to find cash flow in high-cost markets on the West Coast.

Big picture: Recent data from Redfin reveals that investor activity in the housing market remains subdued due to high interest rates and elevated home prices relative to rents. This could change if mortgage rates fall or prices soften.

 

Stay informed with our latest news and advice by visiting our blog. And when you’re ready to take the next step, learn how our loan products can help you achieve your investment goals.

The Federal Reserve has a dual mandate from Congress: to maintain “maximum employment” and “stable prices.” Since spring 2022, Fed Chair Jerome Powell has focused on inflation. However, with inflation nearing the 2% target and the unemployment rate slightly rising, starting this month—when the Fed is expected to make its first rate cut—the central bank’s focus will likely shift toward employment. While the Federal Reserve doesn’t directly set long-term rates, including mortgage rates, these rates often move in response to anticipated future economic and monetary conditions. In fact, amid recent cooling labor market data and the increased likelihood of Fed rate cuts, mortgage rates have come down slightly in recent months. Last week, the average 30-year fixed mortgage rate tracked by Freddie Mac came in at 6.35%, well below the 7.22% peak reached in May of this year. To find out where mortgage rates and the housing market could go from here, LendingOne analyzed the latest housing market data and rate forecasts.

LendingOne Top Findings:

  • Most forecasters expect mortgage rates to fall further over the coming year—but not a huge drop.
  • Despite the recent drop in mortgage rates, turnover in the resale market still remains low. 
  • Refi activity is finally starting to pick up.

Future Rate Projections:

  Looking ahead, most forecasters expect mortgage rates to gradually come down a bit; however, without a recession, the decrease might not be as significant as some investors would like.  The Mortgage Bankers Association expects 5.9% by Q4 2025.  Fannie Mae also expects 5.9% by Q4 2025.  Wells Fargo expects 5.8% by Q4 2025. If the labor market begins to weaken faster than expected, or the jobless rate spikes, short-term and long-term interest rates could fall faster than expected. While if the labor market tightens up, or inflation picks back up, we could get fewer cuts than currently expected.

Will Lower Rates Lead to More Home Sales?

  The recent dip in mortgage rates and slightly improved housing affordability have yet to make a noticeable impact on sales activity.  In fact, the Mortgage Purchase Application Index, a proxy for future existing home sales, is still hovering near multi-decade lows.  The first thing to keep in mind is that this mortgage rate dip is occurring during the seasonally soft window. If the mortgage rate dip holds and the job market remains strong, it could lead to more activity in spring 2025.  Another important point is that even with this mortgage rate drop, the "lock-in effect" is still in play, which will slow the bounce back for existing home sales. Many homeowners who would like to sell and buy something else are staying put, rather than facing a higher mortgage rate and monthly payment.

Refinancing Gains Momentum

  One area that has seen some improvement from the recent mortgage rate dip: Refi. Refinancing has gained momentum as borrowers who secured rates above 7.0% in the past 24 months take advantage of the recent dip for some relief. While this isn’t a refi boom—at least not yet—it does represent an improvement from the multi-decade lows reached during the mortgage rate shock. To really jumpstart the refinancing market and the second mortgage market, the average 30-year fixed mortgage rate would likely need to approach 5.5%.

Final Thoughts

While we've seen a slight dip in mortgage rates over the past year, with forecasters expecting this trend to continue into 2025, investors should remember that predicting interest rates has been especially challenging in recent years. This is due to the lingering effects of the pandemic, lockdowns, record-low rates, massive stimulus, inflation shocks, and the fastest rate-hiking cycle in decades. Stay informed with our latest news and advice by visiting our blog. And when you’re ready to take the next step, learn how our loan products can help you achieve your investment goals.