AEI Housing Market Indicators, April 2025

Video Recording

Key Takeaways

• Recent Movements in Rates and Demand.
  • The median purchase rate held steady at 6.625% in Week 17, 2025.
  • Purchase rate lock volume in 2025 week 17 was at a multi-year low, and was down 31% from the same week in 2019, and down 9% YoY.
• Home Price Appreciation (HPA) and Month’s Supply Trends Through March 2025.
  • March 2025’s preliminary YoY HPA was 2.6%, the lowest March level of the series, and down from 3.3% a month ago and 5.9% in March 2024.
  • YoY HPA is projected to decrease to 2.4% in both April 2025 and May 2025.
  • As of March 2025, all price tiers have shown relatively robust YoY HPA from the slowest at 2.3% (med-high) to the fastest at 4.0% (high).
  • The relatively strong seller’s market continued in March 2025, with months’ remaining supply falling by 0.6 months from Feb. 2025 to 3.6 months (not seasonally-adjusted). Month’s supply is just above pre-pandemic levels.
• A Deep Dive Into Hazard Insurance Rates by State.
  • Between the first quarter of 2019 and the first quarter of 2025, median hazard insurance premiums for new purchase loans rose by 59% across the country, from $963 to $1,530 per year.
  • By state, the largest increase in median hazard insurance was in California, which increased by 90% from $795 to $1,511. The smallest increase was in West Virginia, where premiums increased by 32% from $821 to $1,079.
• Market Principles for Housing Affordability.
  • There is an increasing acknowledgement that state and local regulations—such as zoning and land use rules—are major obstacles to building housing where it’s needed most.
  • We have identified three interrelated factors that help explain why smaller lot single-family detached (SFDs) and single-family attached (SFAs) are generally more affordable: Lot Size, Home Size, and Structure Type (SFD or SFA).
  • With our new county-level density and affordability charts, we can quantify the potential impact of these factors on affordability by examining past home building activity.
• New Construction Data by Year and Price Tier.
  • Since 2012, total new construction sales and their share of all sales (existing and new) have been rising.
  • The share of newly-constructed entry-level homes of new construction is at 47%, compared to 30% in 2014.
  • Given rising home prices, these patterns show that builders have responded to demand for affordable homes by targeting the entry-level market.
• Reforming GSE Lending: A Sustainable Path for Fannie Mae and Freddie Mac.
  • Since the introduction of affordable housing goals in 1992, Fannie Mae’s and Freddie Mac’s (the GSEs) housing finance policies have relied on increasing borrower leverage.
  • This high-leverage approach, characterized by rising debt-to-income ratios, low down payments, and a near-universal reliance on 30-year mortgage terms, combined with cross-subsidies, is deeply flawed. It has led to elevated default risk, minimal sustained wealth building for low-income and minority households, and relentless increases in home prices.
  • Our new paper outlines a more sustainable path: a lending model built around reduced risk, shorter loan terms, targeted subsidies, and wealth creation—not risky leverage.

If you would like to receive invitations to our monthly update calls, please subscribe here. For data on mortgage risk, please use our Mortgage Risk Index Interactive.