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High mortgage interest rates have been deterring homebuyers across the U.S. for the better part of two years. But some parts of the country have seemed immune to these unfavorable market conditions, with homes flying off the market at breakneck speed. In these particular metros, there’s been little to no sign of things slowing down.
Until now.
In its latest report, Realtor.com® identified the 20 hottest markets in the nation—many of which have appeared on the list before. The Northeast and the Midwest dominated this month’s rankings, with 13 and seven metros respectively.
The Manchester-Nashua, NH, metro area claimed the top spot for the sixth time in the past year, followed by Rochester, NY, and Worcester, MA. (To uncover these hot markets, we measure the number of unique views per property on Realtor.com and the number of days a listing remains active on the site.)
The Manchester-Nashua, NH, metro area claimed the top spot for the sixth time in the past year.
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As you might imagine, a hot market is typically pricier because of the frenzy of demand. And this month was no exception—list prices in the 20 hottest markets increased by 3.8% annually, whereas prices nationally were basically flat, inching up just 0.3%.
But here’s the thing that might just give homebuyers some hope: This month’s price growth is showing serious signs of cooling.
“February’s average hot market price growth was the lowest since August 2021,” Realtor.com analyst Hannah Jones explains in her analysis, “suggesting that easing price growth is affecting even the most in-demand markets.”
4 hot markets where home prices are falling
The report also found that four of the 20 hottest markets saw a dip in median prices in February compared with a year earlier.
Home prices in Oshkosh-Neenah, WI, which holds the No. 10 spot, dropped a whopping 12.3%, to a median of $325,000.
Meanwhile, home prices in the pricier Bridgeport-Stamford, CT, area, which ranks No. 14, plummeted by 9.8% annually, to $869,000.
Lancaster, PA, at No. 12, saw prices dip 0.5%, putting the average home at $420,000. And coming in at No. 15, Dayton-Kettering, OH, saw prices decline by 0.7%, to an unbelievably low $218,000.
Homes in the pricier Bridgeport-Stamford, CT, area dropped by 9.8% annually.
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This is exciting news for buyers looking for a deal, but home shoppers shouldn’t let their expectations get too high.
These price declines are mostly due to the homes for sale being a tad tinier, Jones explains.
“This deceleration in median listing price growth is in part due to changing for-sale inventory,” she notes in her analysis. “The typical home for sale in the hottest markets was slightly smaller than one year ago.”
She also points out that the median price per square foot in the 20 hottest markets actually increased by 5.5% annually in February.
In fact, all hot markets except for Bridgeport-Stamford saw price per square foot increase over last year.
This follows the trend in the rest of the U.S., which suggests that these areas are seeing “more smaller, lower-priced homes on the market,” Jones says.
Yet given home affordability has become such a challenge for buyers, many will likely be happy to sacrifice a little bit of space for a lower housing bill, especially in these hot markets.
The South and West are cooling in popularity
While the Midwest and Northeast metros have dominated the Realtor.com hottest markets list since February 2022, other areas haven’t been so lucky.
Southern metros in particular have fallen from popularity, and the three areas that fell the most in February are all in Florida: Punta Gorda (dropping 172 spots), North Port-Sarasota-Bradenton (dropping 164 spots), and Cape Coral-Ft. Myers (dropping 151 spots).
Punta Gorda, FL, fell in popularity in February.
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Western regions have also seen a drop in popularity.
“Sun Belt metros picked up steam during the [COVID-19] pandemic, but climbing prices and mortgage rates eventually stifled buyer demand,” Jones explains.
“More affordable markets in the Midwest and Northeast grew in popularity as once-frenzied Southern markets cooled off. Falling demand has allowed inventory levels to recover and price growth to simmer in these markets, which suggests that more market balance is ahead.”
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