Q2 Home Prices Hit Record Highs Even as Sales Slow

U.S. home prices continued to climb in the second quarter of 2025, but the pace of growth slowed and fewer markets saw price gains compared to earlier in the year. According to the National Association of REALTORS® (NAR) Metropolitan Median Area Prices and Affordability and Housing Affordability Index, 75% of metro areas (170 out of 228) posted year-over-year price increases in Q2 down from 83% in Q1.

The share of markets with double-digit annual price growth shrank sharply, dropping from 11% in Q1 to just 5% in Q2.

The median price for an existing single-family home nationwide rose to a record $429,400, up 1.7% from a year ago a slower pace than the 3.4% YoY increase recorded in Q1.

📊 Affordability Remains a Challenge

NAR’s report shows more markets are experiencing price declines 24% in Q2, compared to 17% last quarter.

• Typical monthly mortgage payment (20% down, single-family home): $2,256
  • +6.5% quarter-over-quarter
  • -0.3% year-over-year
• Share of income spent on mortgage payments: 25.7% (up from 24.4% last quarter, but down from 26.9% a year ago)

First-time buyers are feeling the strain:

• Median starter home price: $365,000 (10% down payment)
• Typical monthly payment: $2,212 (up $134 from Q1, down $6 YoY)
• Share of income toward mortgage: 38.7% (up from 36.8% in Q1, down from 40.6% a year ago)

Regional & Market Trends

“Home prices have been rising faster in the Midwest, due to affordability, and the Northeast, due to limited inventory,” said Lawrence Yun, NAR Chief Economist. “The South region especially Florida and Texas is experiencing a price correction due to the increase in new home construction in recent years.”

Median existing single-family home price by region (YoY):

• Northeast: $527,200 (+6.1%)
• Midwest: $328,800 (+3.5%)
• West: $646,100 (+0.6%)
• South: $376,300 (unchanged)

📈 Top 10 Large Markets by YoY Price Gain

1. Toledo, OH — +10.5%
2. Jackson, MS — +10.5%
3. Nassau County–Suffolk County, NY — +9.6%
4. New Haven–Milford, CT — +9.0%
5. Reading, PA — +8.3%
6. Springfield, MO — +8.2%
7. Akron, OH — +8.1%
8. Montgomery, AL — +7.9%
9. Cleveland–Elyria, OH — +7.8%
10. Rochester, NY — +7.8%

Top 10 Most Expensive U.S. Markets

1. San Jose–Sunnyvale–Santa Clara, CA — $2,138,000 (+6.5%)
2. Anaheim–Santa Ana–Irvine, CA — $1,431,500 (-0.4%)
3. San Francisco–Oakland–Hayward, CA — $1,426,000 (-1.6%)
4. Urban Honolulu, HI — $1,148,600 (+4.3%)
5. San Diego–Carlsbad, CA — $1,025,000 (-2.4%)
6. Salinas–Monterey, CA — $978,400 (-5.5%)
7. Oxnard–Thousand Oaks–Ventura, CA — $958,100 (+3.3%)
8. San Luis Obispo–Paso Robles, CA — $928,000 (+3.7%)
9. Los Angeles–Long Beach–Glendale, CA — $879,900 (+2.9%)
10. Boulder, CO — $859,500 (-3.2%)

📉 Sales Lag Behind Job Growth

Yun noted that home sales and the homeownership rate are lagging despite a strong labor market.

• The U.S. has added more than 7 million net jobs compared to the pre-pandemic peak.
• Mortgage rates remain elevated, keeping sales below pre-COVID levels.
• The homeownership rate has fallen by one percentage point since early 2023.

Looking ahead, Yun said:

“If interest rates decline, the strongest release of pent-up housing demand is likely to occur in states with significant job growth in recent years, such as Idaho, Utah, the Carolinas, Florida, and Texas.”

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