Front-running States Boast Hottest Real Estate Markets Based on Realtor.com's Assessment
In a recent interview on 'Mornings with Maria,' Realtor.com CEO Damian Eales discusses the state of housing affordability in the U.S.
Certain states outshine others when it comes to housing affordability and homebuilding, as revealed in a new report from Realtor.com.
This online real estate marketplace assigned letter grades to America's 50 states and Washington, D.C., in its "Grading the States: Affordability & Homebuilding Report Cards" report. Only three earned As.
Realtor.com focused on "housing affordability and the ability to meet future supply challenges through new construction" when evaluating each state's overall performance.
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Chief economist Danielle Hale stated, "Our state report card rankings reveal stark disparities in housing affordability and homebuilding efforts across the U.S. Some states are paving the way with robust homebuilding activities, while others are grappling with high housing prices and slow construction."
With American homebuyers facing affordability issues for years, the U.S. is also staring down a supply gap of 3.8 million homes, according to Realtor.com.
The following five states excelled in the Realtor.com report:
South Carolina: A
Showcasing Charleston's Ashley River, South Carolina takes the top spot.
With a median asking price of $354,429 and households boasting a median income of $64,989, the state's "forward-thinking homebuilding initiatives" earned it the sole 'A' grade for affordability and homebuilding.
Iowa: A-
Des Moines's flowing Des Moines River marks Iowa, the state with the highest Realtors Affordability Score of 0.92 out of 2. The median home price sits at $294,600, with a new construction premium of 58.4%.
Texas: A-
Texas's impressive permit-to-population ratio (1.67) contributed to its 'A-' (one of two on the ranking), along with being responsible for 15.3% of new construction permits in 2024.
Indiana: B
Indiana clinched an overall score of 69.9 out of 100 for affordability and homebuilding, securing the No. 3 spot with a B+.
North Carolina: B
North Carolina's median asking price checked in at $408,663, where its "strong affordability and homebuilding activities" shone.
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The majority of states fell into the C-range for affordability and homebuilding, with six earning a C+, 14 getting a C, nine claiming a C-, and Washington, D.C. receiving a C-.
Southern and Midwestern states dominated the B range. Montana was the sole 'D' grade holder.
Seven states - Oregon, Connecticut, California, Hawaii, New York, Massachusetts, and Rhode Island - received an 'F' for affordability and homebuilding in Realtor.com's report.
According to an April 3 report from Realtor.com, nationwide median home prices remained at $424,900 in March - unchanged from the previous year but still 38.9% higher than March 2019[3]. A separate survey released in late January by NerdWallet revealed that approximately 15% of Americans intend to purchase a home this year[5].
Enrichment Insights:
- Strict regulations, geographic limitations, and high demand create housing affordability challenges in high-cost states like California and New York.
- Less restrictive land-use policies, abundant flat terrain, and increased demand drive housing affordability in states such as Texas and Indiana.
- Business-friendly tax environments and lower cost of living contribute to affordability in states like Texas.
- California and Oregon face higher construction costs due to labor, permits, and materials compared to states like Texas.
- Southern and Midwestern states like North Carolina and Georgia exhibit rapid home price increases coupled with higher supply growth, maintaining relative affordability.
- The Realtor.com report, titled "Grading the States: Affordability & Homebuilding Report Cards," assigns letter grades to the states based on their housing affordability and homebuilding efforts.
- South Carolina received an 'A' grade for its affordability and homebuilding initiatives, boasting a median asking price of $354,429 and a median income of $64,989, which allows for forward-thinking homebuilding activities.
- The online real estate marketplace indicated that the U.S. is facing a supply gap of 3.8 million homes, given the affordability issues faced by American homebuyers for several years.
- The report classified seven states - Oregon, Connecticut, California, Hawaii, New York, Massachusetts, and Rhode Island - as having a 'F' grade for affordability and homebuilding, implying sluggish real estate and finance activities in these regions.
