The report found that affordability remains a major driver of demand. More than half of the hottest markets had median home prices below the national median, suggesting that buyers are prioritizing cost-effective options.
Rising tide in Philly
The Philadelphia tri-state metro area ranked as the fastest-rising market during the year ending in February, jumping 77 spots to place No. 58.
Rich Bradford, broker associate with The Bradford Team at RE/MAX One Realty in Haddonfield, New Jersey, said the results for his local market could be even better if so many potential sellers weren’t “locked in” by low mortgage rates.
“There’s just so many people here that are still looking for houses,” Bradford said. “Inventory is down for us about 33% compared to this time last year. I think that people just don’t want to sell because the interest rates are still high. You know, people would move, but they’re like, ‘Where am I going to go?’ The interest rates are just crazy.”
The factors that have combined to form supply-and-demand bottleneck aren’t going away anytime soon, Bradford said.
“There’s still a lot of people getting like, 100% of their asking price, even a little over,” he said. “There’s only about a two-month inventory in Haddonfield. When you’re that low on inventory, prices are going to keep going up. It’s just the way it is.
“There are enough people that are looking to either move up or move down. There’s still a lot of first-time homebuyers in the market too. First-time homebuyers stimulate sales, you know. They keep the market healthy.”
New York (up 48 spots) ranked behind Philadelphia in terms of yearly improvement. Next was Kansas City (+45), Baltimore (+44) and Indianapolis (+21).
Regional disparities
For 17 straight months, the Northeast and Midwest have dominated Realtor.com’s 20 hottest markets, a shift from pre-pandemic trends when demand was more evenly spread across regions. Limited housing supply in these areas has contributed to their sustained appeal, the report explained.
The No. 1 spot went to Hartford, Connecticut, which moved up from No. 7 a year ago. It was followed by Manchester, New Hampshire, which held the top spot in February 2024.
Kenosha, Wisconsin, ranked No. 3 among the hottest markets, up from No. 5 at this time last year. It held a $338,000 median listing price in February with a median time on market of 36 days.
Margaret Labus serves Kenosha as the team lead at the Berkshire Hathaway HomeServices-affiliated Starboard Group. She said a high ranking for the Kenosha market isn’t surprising.
“Kenosha has always been kind of the engine in terms of real estate sales in southeast Wisconsin,” she said. “We’ve suffered, just like any other major market in the U.S., where we have very low inventory and very high demand.
“Our new listings have gone up slightly but not enough to keep up with demand. So that really kind of hinders our actual total sales and total closings. But our sale prices keep climbing and climbing year over year.”
In contrast, the South and West have seen the largest increases in inventory, rising 37.4% and 29.9% year over year, respectively. The greater availability of homes in these regions has slowed the pace of sales and reduced buyer competition.
Spring optimism and homebuilder help
The spring housing market is expected to bring increased activity, but price growth in the hottest markets has slowed to 0.9% annually — the lowest rate since Realtor.com began tracking the data.
High mortgage rates, which remain in the upper-6% range, have also kept many potential buyers and sellers on the sidelines. Pending and new-home sales each declined in January, indicating that affordability concerns continue to weigh on the market.
Labus said she hopes to see progress made in the coming year to ease the homebuilding process, especially in the face of tariffs that are likely to affect the cost of materials.
“I think that we’ve underbuilt for 13 years in this country and in this state, so definitely, new construction is in order,” she said. “I’m just concerned about the price of new construction when we rely so much on imported goods for building these homes. I wish there was a way that we could make it more affordable for the actual raw materials, the construction materials. That would definitely help with the sale pricing of new construction.
“Moreover, I think it’s going to take a lot of cooperation between developers and municipalities and the state to really build, not just talk, but actually do work on affordable housing and making sure that we have a high level of inventory. We just don’t have a way at the local level. It’s a hard navigation to get through when it comes to builders and developers working with local counties and cities to get the incentives that they need to make the numbers work for new developments.”
