Home Prices Remain Out of Reach for First-Time Buyers
Buying a home is no easy task, but the first quarter of 2025 was especially challenging for young buyers, according to personal finance company NerdWallet’s Q1 2025 First-Time Homebuyer Affordability Report. On average, homes across the U.S. were listed at around $414,000 last quarter. At that price, and after a downpayment of about 9%, first-time buyers faced an average monthly mortgage payment of $3,240, requiring a household income of at least $138,700 per year.
Despite unaffordability, list prices fell in Q1 2025
Nationwide, list prices were down by 2% compared with Q4 2024, meaning buyers’ money could go a bit further toward the sticker price on their home. However, with rising mortgage rates, this decrease didn't have a signficant effect on their average monthly payment.
Still, some metro areas saw list prices fall even further. Across the most populous metros, the largest quarter-over-quarter drops in adjusted list prices occurred in Detroit, where list prices declined by 8% compared to the previous quarter. San Francisco, Philadelphia, and Indianapolis followed, with list prices declining 5% quarter-over-quarter.
Home listings grow across the U.S.
While listing prices were down slightly, the number of homes for sale grew in Q1 2025 by 27% year-over-year. Even so, the number of for-sale listings fell by 7% on a quarter-over-quarter basis.
Across the most populous U.S. metro areas, the listings declined the most in Buffalo, N.Y., and Grand Rapids, Mich. In both cities, there were 30% fewer listings in Q1 2025 than in Q4 2024. On the other end of the spectrum, Denver and Las Vegas saw the most quarter-over-quarter growth, by 62% and 59%, respectively.
Affordability has challenged the housing market for months
- Report Finds Only Two US Housing Markets Remain Truly Affordable: A recent study from Clever Real Estate found just two metros—Pittsburgh and Detroit—were considered truly affordable for locals.
- First-Time Homebuyers Gain Confidence: In March 2025, a study from TD Bank showed that first-time buyers are eager to enter the housing market regardless of the affordability conditions. While most agreed home prices and mortgage rates remained high, 74% said they planned to buy a home anyway.