Real estate market witnessed a surge in property prices during the second quarter of 2025
Record High Median Home Prices Amid Market Cooling
The national median single-family existing-home price reached a record high of $429,400 in Q2 2025, marking a slight slowdown from the 3.4% year-over-year increase seen in Q1.
Despite the cooling in the broader housing market momentum, 75% of metro areas still posted home price gains. However, fewer showed double-digit increases compared to earlier in the year.
In the Northeast, prices rose by 6.1% year-over-year, primarily due to limited inventory. Conversely, the Midwest experienced a 3.5% rise, driven by affordability factors.
The South region, particularly Florida and Texas, saw prices stabilize or experience corrections due to a surge in new home construction.
San Jose-Sunnyvale-Santa Clara remains the priciest market, with a median home price of $2.14 million, up 6.5% from last year. California and Hawaii continue to have the priciest markets in the country.
Toledo, Ohio, Jackson, Miss., and Nassau-Suffolk, N.Y., saw the largest annual gains in home prices, with increases of 10.5%, 10.5%, and 9.6% respectively.
The typical family now spends 25.7% of income on mortgage payments, indicating a worsening of housing affordability quarter-over-quarter.
NAR Chief Economist Lawrence Yun attributes strong buyer demand in the Midwest to relative affordability and supply constraints in the Northeast.
Mortgage rates have returned to normal in Q2 2025, but they continue to suppress overall sales and homeownership rates. Despite this, job growth and persistent regional demand continue to support higher prices in many markets.
In conclusion, the record prices reflect regional disparities, constrained supply in key areas, and persistent demand amid elevated borrowing costs rather than a broad national market heating up. The price growth slowed from 3.4% year-over-year in Q1 to 1.7% in Q2, indicating a market cooling even as median prices hit new highs.
[1] National Association of Realtors, Quarterly Housing Report, Q2 2025.
Investors in the real-estate sector should pay attention to the regional differences in the housing market, as prices are rising fastest in Toledo, Ohio, and Nassau-Suffolk, NY, but constrained supply is driving up prices in the Northeast. On the other hand, finance analysts may find that the cooling of the broader housing market momentum is creating opportunities for investing in the Midwest, where job growth and affordability factors have boosted home price gains.
