The Current State of the Housing Market: A Balancing Act Between Supply and Demand

The housing market has seen its fair share of turbulence since the pandemic began, driven by record-low mortgage rates and a barrage of demand that has, until now, outpaced supply. Fast forward to March 2024, prices nationwide were an astonishing 39% higher than before the pandemic, according to the S&P CoreLogic Case-Shiller Index. Yet, amid rising prices, a new report from the National Association of Realtors and Realtor.com reveals that the supply crunch is starting to ease—but not where it’s needed most.

A Deep Dive into Affordability Issues

The ongoing effects of the pandemic have created a significant struggle for many homebuyers, particularly those at the lower and middle price tiers. While demand remains robust across the board, it’s the more affordable segments that are still gravely undersupplied. As a result, homes in lower price brackets continue to lag behind high-end market performance. The recent report breaks down these affordability challenges and details the exact pain points buyers are experiencing.

Affordability was assessed using standard underwriting guidelines based on a 30-year fixed mortgage, where monthly payments (including mortgage, property tax, and insurance) should not exceed 30% of a homebuyer’s income.

For households earning between $75,000 and $100,000 per year, considered middle- to upper-middle-income earners, the supply of affordable homes saw a slight increase from 20.8% in March 2024 to 21.2% in March 2025. However, this is still far from ideal; back in March 2019, these buyers could afford nearly half (48.8%) of all active listings. To achieve a balanced market where that group could afford 48% of listings, an additional 416,000 listings priced at or below $255,000 would be necessary.

For those earning below $75,000, the situation worsens. A buyer with a salary of $50,000 could afford only 8.7% of the available listings this March, a drop from 9.4% in March 2024 and a significant decline from 27.8% in March 2019. In stark contrast, higher-income households—those earning $250,000 or more—can access nearly 80% of the housing market without issue.

Regional Variations and Market Imbalances

As Danielle Hale, chief economist at Realtor.com, points out, “Shoppers see more homes for sale today than one year ago, and encouragingly, many of these homes have been added at moderate-income price points.” However, she warns that availability still remains insufficient for low- and moderate-income households. Furthermore, gains in inventory haven’t been evenly distributed; areas like the Midwest and the South have experienced more significant improvements.

Cities in the Midwest, such as Akron, Ohio, St. Louis, and Pittsburgh, are currently considered balanced markets, where supply meets demand. However, markets like Raleigh, North Carolina, and Des Moines, Iowa have made strides in adding affordable listings but have yet to meet the full demand.

In contrast, more than 40% of the nation’s 100 largest metropolitan markets, including Seattle and Washington, D.C., still face severe challenges. In these regions, even affluent households need to earn over $150,000 annually to afford half of the available homes.

Other historically overheated markets, such as Austin, Texas, San Francisco, and Denver, have seen a surge in affordable home supply, now exceeding pre-pandemic levels. “With the right mix of new construction, market shifts, and local policy efforts, even some of the most challenging markets can start to bend toward balance,” the authors of the report note.

However, markets in Southern California, including Los Angeles and San Diego, along with New York City, are witnessing worsening conditions. Factors contributing to this decline include decades of underbuilding, a limited supply of buildable land, high construction costs, restrictive zoning laws, and swift in-migration.

Challenges for Homebuilders

Homebuilders are striving to construct more affordable homes, but increased costs pose a significant hurdle. The costs could rise even further due to tariffs and updated immigration policies. In March, single-family housing starts were nearly 10% lower than in the same month the previous year, highlighting the challenges within the construction sector.

In conclusion, while there is some relief in housing supply, it remains insufficient for low- to moderate-income buyers, who face a daunting landscape. As the market navigates these complexities, finding a balance between supply and demand will be crucial for ensuring that homeownership remains attainable for all income levels.

For ongoing updates and detailed analyses of real estate trends, explore our housing market insights, check out our housing affordability reports, and learn more about national housing policies.