Why are some markets cooling while others heat up?
Homebuyers received encouraging news in March as housing affordability improved nationwide, driven by falling mortgage rates and slower price growth, according to new data from First American Data & Analytics.
The Real House Price Index (RHPI) showed affordability improved 2.4% over February and 3.2% annually. Mortgage rates in March were 17 basis points lower than one year ago, while national house price appreciation slowed to 2.3%.
“The final component of affordability—household income growth—also contributed to the improvement, as incomes continued to rise,” the report stated.
However, the national average masks significant regional variation. While national home price growth remains modestly positive, prices declined in 13 of the top 50 metro markets compared to a year ago.
Six of those 13 declining markets are located in Texas or Florida, two regions that experienced rapid pandemic-era expansion. Tampa, Florida, led declines with prices falling nearly 5% year over year, driven by high mortgage rates, cooling demand, and rising inventory.
At the opposite end, Cincinnati posted the strongest gains with over 9% annual price growth. “Tight inventory in a relatively affordable market continues to support strong price gains in this market,” according to the analysis.
Regional differences emerge in home prices
Chief economist Mark Fleming noted that “national home values conceal regional nuance, and in today’s market, knowing where to buy may matter more than when to buy.”
The report examined geographic fragmentation by calculating monthly gaps between the highest and lowest annual house price growth rates among the top 50 markets from 1992 through March 2025. Surprisingly, current dispersion levels are not historically extreme.
House price growth divergence peaked during the 2004 housing boom, when Las Vegas surged 46.5% year over year while Pittsburgh declined 4.6%—a spread exceeding 51 percentage points. The historical average divergence between strongest and weakest markets was just over 21 percentage points. In March 2025, the difference was 14 percentage points, below average.
The regional variation carries direct implications for affordability. In high-growth markets, buyers face rising prices alongside sticky mortgage rates. In cooling markets, flat or falling prices can provide modest relief despite elevated rates.
Consumer house-buying power increased 2.4% between February and March 2025, and 5.6% year over year. Median household income has increased 3.8% since March 2024.
Real house prices are 32.7% more expensive than January 2000 levels. Unadjusted house prices are 63.3% above the 2006 housing boom peak, while real, house-buying power-adjusted prices remain 7.0% below their 2006 peak.
The divergent trends suggest that while affordability is improving nationally, local market conditions increasingly determine buyer opportunities and challenges.
How are differing home prices affecting the housing market? Share your insights below.
