Homes on the market have surged—up nearly 20% compared to a year ago—offering a glimmer of hope in a market long hindered by limited inventory. While this uptick slightly eases price pressures in some regions, supply still falls well short of demand in many markets, keeping a large group of prospective buyers locked out.
Who’s Disadvantaged in Today’s Market?
Nadia Evangelou, Senior Economist and Director of Real Estate Research at NAR, points out that middle-income buyers face the greatest affordability challenges. Despite experiencing strong recent gains, many remain excluded—over half of the current listings remain unaffordable to this group. Governments have begun to respond with zoning reforms and construction incentives, but more aggressive and widespread action is needed. Evangelou estimates that hundreds of thousands more homes priced under $260,000 are required to restore market balance.
Unequal Access Across Income Levels
There’s a sharp contrast between income groups: buyers earning under $50,000 can afford fewer than 1 in 10 listings, starkly limiting opportunities for first-time and lower-income buyers. This inequality has ripple effects throughout the housing market—impacting everything from move-up purchases to overall transaction volumes.
Builder Response: Smaller Isn’t Enough
Builders are adapting by constructing smaller homes—a promising shift that began in 2024. The current median square footage is the smallest in over a decade. Yet, affordability remains difficult to achieve due to high land and materials costs, along with zoning constraints; building homes under $260,000 often doesn’t add up financially.
Regions Making Headway: Raleigh and Des Moines
Some metros are bucking the trend. Raleigh, NC, and Des Moines, IA, are making strides by boosting housing supply across price categories and adopting flexible local policies—making them promising models for other areas seeking affordability.
Long-Term Solutions for Lasting Relief
Though there’s no magic fix, Evangelou highlights a few key strategies:
- Reform zoning and land use policies, including embracing inclusionary zoning, smaller lots, duplexes, and infill development to reduce construction barriers.
- Provide incentives—such as tax credits or favorable financing—to builders expanding affordable options.
- Support down payment assistance programs, enhancing access to homeownership for buyers with good credit who lack savings.
- Track progress with data tools, like the REALTORS® Affordability Distribution Score, helping pinpoint successful approaches in metros like Raleigh or Grand Rapids that others can emulate.
Will Higher Inventory Ease Prices?
In markets with growing inventory—especially in parts of Florida, the South, and Midwest—price growth is beginning to slow, offering relief to buyers. However, in expensive coastal areas, improvements remain limited, unless more affordability-oriented construction is launched. National Association of REALTORS®
The Persistent Challenge for First-Time Buyers
More listings help—but not if they remain out of reach. For many first-time buyers, particularly those with lower incomes, options under $200,000 remain scarce, limiting entry into homeownership regardless of overall inventory increases.
The Role of Down Payment Assistance
Evangelou emphasizes that while down payment assistance (via grants or low‑interest loans) helps make homeownership attainable, it must be paired with affordable housing supply. Otherwise, well-prepared buyers still end up competing over the same limited offerings.
Is There Hope for the Housing Crisis?
Yes—but progress remains uneven. Inventory growth is a positive sign, but if new listings are predominantly high-end homes, affordability won’t improve. So while the situation is moving in the right direction, the crisis is far from over.
How Real Estate Professionals Can Help
NAR members play a crucial role: guiding buyers on what’s financially realistic, managing expectations, and connecting them to resources like down payment assistance. In a competitive housing environment, having knowledgeable support can make all the difference.
Summary
| Key Insight | Takeaway |
|---|---|
| Middle-income buyers struggle most | Over 50% of homes are unaffordable |
| Uneven access | Low-income buyers see fewer options |
| Builder response | Homes shrinking in size but still pricey |
| Success stories | Raleigh, Des Moines show balanced growth |
| Solutions needed | Zoning reform, incentives, assistance, data |
| Caution on inventory | Price easing only in select regions |
| First-timer pain point | Affordable entry-level options remain limited |
| Down payment help | Useful only paired with affordable supply |
| Outlook | Promising, but much work remains |
| Role of NAR pros | Essential in advising and supporting buyers |
Source: REALTOR® Magazine
“Q&A With Economist Nadia Evangelou: Solving Housing’s Shortfall”
National Association of REALTORS®
Reprinted with permission
