The nation's most resilient housing markets are concentrated in the Midwest and Northeast, where affordability and stable local economies continue to attract homebuyers in a challenging national environment. A new report for Fall 2025 shows that buyers are prioritizing value, pushing smaller and mid-sized metropolitan areas to the top of the list for real estate activity.
For the second consecutive quarter, Manchester-Nashua, New Hampshire, has been identified as the country's leading housing market. It is followed by a series of Midwestern cities, including Rockford, Illinois, and South Bend, Indiana, which have seen significant jumps in demand.
Key Takeaways
- Midwest and Northeast metro areas represent the entire top 20 list of the most in-demand housing markets for Fall 2025.
- Affordability is the primary driver, with top Midwest markets featuring median home prices between $240,000 and $400,000.
- Manchester-Nashua, NH, remains the number one market, while South Bend, IN, surged 21 spots to reach third place.
- A persistent inventory shortage, caused by the "lock-in effect" of low mortgage rates, continues to limit options for buyers and keep markets competitive.
A National Market Defined by Caution
The broader U.S. housing market experienced modest improvements for buyers this fall. Mortgage rates saw a slight dip, falling from around 6.7% in July to 6.26% by late September, providing some relief. This easing of borrowing costs spurred a minor increase in new and pending home sales.
Despite these gains, overall sentiment remains cautious. Many potential buyers and sellers are waiting on the sidelines, influenced by economic uncertainty, a cooling labor market, and persistent inflation. The national unemployment rate has hovered near 4%, and while the Federal Reserve has begun cutting its benchmark rate, its impact on mortgage costs has been limited.
This has created a highly segmented market. Buyers with smaller budgets are flocking to the nation's most affordable cities, while activity in the once-frenzied Southern and Western markets continues to slow down.
The Midwest's Affordability Advantage
The defining trend this fall is the overwhelming dominance of cities in the Midwest and Northeast. These regions have remained highly competitive due to a combination of lower living costs, stable job markets, and relative housing affordability.
In the top-performing Midwestern metros, median home prices were significantly lower than the national average. Cities like Rockford, IL ($250,000), Canton, OH ($257,000), and Toledo, OH ($242,000) offer entry points far below what is seen in most of the country.
Lower Living Costs
Beyond housing, the overall cost of living in these leading Midwest markets is, on average, 8.5% lower than the national level. This dual benefit of cheaper housing and lower daily expenses provides significant financial relief for households.
Northeast markets, while more expensive, offer value for those looking for alternatives to major hubs like Boston. Manchester-Nashua, NH (median price $575,000), and Worcester, MA ($553,000), continue to attract high-earning buyers seeking more space and value within commuting distance of a major economic center.
Spotlight on South Bend A Market on the Rise
Perhaps the most notable story this quarter is the rapid ascent of the South Bend-Mishawaka, Indiana-Michigan, metropolitan area. It climbed 21 spots to rank as the third-hottest market in the nation, illustrating the powerful draw of affordability combined with economic stability.
South Bend by the Numbers (September 2025)
- Median List Price: $312,000 (+18.3% year-over-year)
- Price Growth Since 2019: +52.3%
- Days on Market: 42 days (three weeks faster than the national median)
- For-Sale Inventory: Down 37.8% compared to pre-pandemic levels
Located within 100 miles of Chicago, South Bend's economy is supported by higher education, healthcare, and manufacturing, with the University of Notre Dame acting as a major anchor. Despite significant price appreciation since 2019, its median home price remains nearly 40% below the national median.
The demand is largely driven by outside interest. Data shows that approximately three-quarters of the online listing views for South Bend properties came from shoppers outside the metro area, many from the nearby Chicago market.
The Persistent Inventory Problem
A major headwind facing all markets, particularly those in the Northeast and Midwest, is a severe lack of homes for sale. This scarcity is largely due to the "lock-in effect," where existing homeowners are unwilling to sell and give up the record-low mortgage rates they secured in recent years.
Reports indicate that more than 80% of outstanding mortgages have rates below 6%, making a move financially unappealing for many. While new construction has provided some relief in the South and West, building activity has been slower in the older, more established markets of the Midwest and Northeast.
This dynamic creates a difficult situation for buyers. Even as more people enter the market, attracted by slightly lower rates, the number of available homes remains stubbornly low. For the market to find a new equilibrium, a significant change is needed in either borrowing costs, new construction, or homeowner confidence.
Until then, the housing market is expected to remain in its current holding pattern, with affordable, economically stable cities continuing to outperform the rest of the country.
