Top 10 Strongest & Weakest Housing Markets by State 2023
Gina is a licensed real estate salesperson, experienced trainer, and former high school educator of 1,000+ learners. She writes for Fit Small Business with a focus on real estate content.
Melanie Patterson is a subject matter expert at Fit Small Business focusing on real estate. She has over 30 years of combined experience in real estate sales, marketing, property management, and real estate investing. She is a licensed active real estate salesperson in both New Hampshire and Massachusetts and received her Luxury Homes certification through the Residential Real Estate Council (RRC). She is also a certified business advisor.
This article is part of a larger series on How to Become a Real Estate Agent.
As the real estate market has slowed in 2023 from the previous three years, some housing markets in the United States continue to do better than others. Texas and California are still vying at the top with the strongest housing markets by state, while Kentucky and Florida rank as the weakest. We analyzed available homes for sale, mortgage rates, local median home prices, new construction, and median household income to determine the states’ health with the best real estate market.
Top 5 Strongest Housing Markets by State
The top five strongest housing markets have seen decreases in household income and available housing, while interest rates and median home prices have climbed. Still, they have suffered less impact from the current housing market than other states. Read on to see if your state made it into the top five:
1. Texas
Texas replaced California in 2023 as the strongest housing market by state. With an existing home inventory of 83,222, the available houses for sale have more than doubled since last year. It has seen a drop of about 6% in new construction and is now at 248,648 since 2022. Despite this drop, Texas has more new construction than any other state, so buyers who are looking for a brand-new home or are planning to move will find a growth of available housing.
Austin, Texas, skyline
The median household income in 2023 is $63,826, a drop of 27% since 2022. However, homes are still affordable, with a median home price of $187,200, rising 8% over the last year. The average mortgage interest rates jumped from 4.04% to 6.72% in 2023, but mortgage interest rates have significantly increased across the nation over the last year.
The population has grown by about 3% since 2020 and will continue as more people will need housing. With substantial emigration, it’s an excellent time to become a real estate agent in Texas. It continues to lead the U.S. in economic growth and is ranked the ninth-largest economy in the world. Employment increases by 3.5% are expected, falling behind California and New York, but still a good job outlook, so if you’re moving to Texas, you should be able to find employment.
2. California
If you’re California dreamin’, you’re not alone. The Golden State ranks second-best among real estate markets in the U.S. in 2023. California’s total housing inventory has doubled since last year, with 56,209 available homes. New construction is down to 109,157 new developments, dropping by 7%.
Golden Gate Bridge San Francisco, California
California still has a healthy supply of available homes, putting it in second place compared to some other states. However, home prices and interest rates make it challenging to find affordable housing. The median home price in Cali has increased by 7% to $538,500. If our evaluation were based on pricing alone, Maryland, Hawaii, and California, the top three, would be the winners of the most expensive housing market by state in the U.S.
The median household income in 2023 is $78,627, a drop of 27%. Current mortgage interest rates for California are at 6.78%, up from 4.39% in 2022. Someone earning the median income, with the current 30-year fixed interest rate and a 20% down payment, would need to double their income to afford a median-priced California home. This factor contributed to California dropping from first place to second in 2023.
California’s population decreased by 1.3% and has been declining due to the pandemic and emigration. It’s the 12th-most populated state in the U.S., so there is still room for growth. The state boasts a 6.4% increase in jobs over the last year, one of the highest in the country. As the second of the top best real estate markets in the U.S., with its healthy employment outlook, not only is it a good time to invest in real estate, but it’s also an excellent time to become a real estate agent in California.
3. New York
You may have heard of “the city that never sleeps,” which could be due to its pride as the third-place winner of the best housing market in the U.S. New York’s existing home inventory dropped only 3% to 38,554, so there are still homes to snatch up even in the current low inventory market. New construction decreased over the past year to 39,022, 3,036 units fewer than a year ago.
Statue of Liberty and Lower Manhattan, New York
The Empire State has a median annual household income of $71,117, a whopping 30% decrease since 2022, and the median home price is now $325,000, which is 4% higher than last year. The current mortgage interest rate is 6.71%, up from 4.39%. It ranks at the top of the highest housing market in the U.S. with its more affordable prices than California, but its low inventory drops it one notch to third place.
New York’s population decreased by 1.58% from 2020 to 2021, the most significant decrease in the country during the pandemic. Nine states share real estate license reciprocity with New York. Most are for broker’s licensing. However, a few states, including neighboring Connecticut, offer both salesperson and broker reciprocity. New York has a predicted jobs growth rate of 4.57%, potentially creating a need for homes, so it’s an excellent state to become a real estate agent.
4. New Jersey
New Jersey came in fourth in real estate rankings by state in 2023. New Jersey’s available housing inventory jumped 20%, with 16,767 homes waiting for new owners. The median home price has gone up this year by $8,000 and is now $343,500.
Atlantic City, New Jersey
New construction declined by 10%, and there are 34,795 new developments available. Mortgage rates have increased in the Garden State to 6.65%, and the median household income of $85,245 experienced a 26% drop. Median income earners could afford median-priced homes at the current rates and terms.
There’s a predicted employment growth of 4.45%, which may encourage a garden of new homebuyers and investors in need of real estate professionals. New Jersey is expected to see upward population growth of 7.36% between 2020 and 2030, but it will still lag behind the rest of the United States.
5. Colorado
Colorado joined the ranks of states with the best housing market this year, replacing Hawaii in 2022. Coming in fifth place, Colorado is not the top-ranking state to buy property, but it earned its rank in the top five, with a decent amount of affordable homes despite a drop in available homes and income.
The Rocky Mountains in the fall, Colorado
The median income of the Centennial State is $75,231, down 7% since last year. Available homes for sale are 16,857, which has seen a drop of 7% from 2022’s peak availability.
New construction decreased by 19% to 46,118 developments over the last year. The median cost to buy a home in Colorado is $369,900, down 7%. As with every state, mortgage rates have increased. Colorado is no different, with its 30-year fixed rate of 6.75%. Because housing prices have declined alongside income, Coloradans should be able to buy a house with current rates and terms.
Its predicted employment growth rate of 3.63% isn’t the highest in the country, but it indicates there are available jobs if you plan to buy a house in Colorado. It experienced a slow 1.1% population increase in the last year. However, it’s predicted to increase by 12% between 2020 and 2030, so more homes will be needed.
Colorado’s four seasons encourage year-round tourism, making it a great state to invest in vacation rental properties.
5 Weakest State Housing Markets
Shifting from the best state to buy real estate, the five weakest housing markets suffer from a low number of available homes and new construction as mortgage rates saw a rapid increase. Household incomes are low compared to other housing markets in the country. Home prices are also low, making them more affordable than other states in our study.
1. Kentucky
The Bluegrass State tops the list as the weakest real estate market in 2023. There’s a tight inventory of 8,136 existing homes and only 13,752 new constructions available. The average household income of $52,238 dropped 26%, while home prices increased by 4%.
Farm property on a country road in Kentucky
Still, someone earning the median salary in Kentucky can afford the median home price of $147,100 with 5% down at the current 30-year fixed rate mortgage of 6.79%. This mortgage rate is higher than all of the rates of the five best states to buy real estate, but it balances out due to low home prices.
Anticipated job growth is to increase to 2.40%, among the lowest in our research, but there should still be room for real estate agents to get new listings. It’s also a good state for real estate investing, according to TurboTenant, due to its lack of rent control laws.
2. Florida
Amid the relatively higher volume of homes available on the market, Florida struggles with housing shortages as the population booms. This upward growth is predicted to continue. The Sunshine State boasts a strong inventory of 89,907, an increase of 60% from 2022. New construction dropped 7% to 196,203. It ranked #1 in our research for available housing inventory.
Welcoming Florida beach
However, since the soaring demand outpaces supply, prices have climbed, with homes selling at a median price of $232,000—an increase of 8% since 2022. Mortgage rates continue to surge at 6.76%, up from 4.43%. The average household income is $57,703, a drop of 29%, but it’s enough to afford a median-priced Florida home at prevailing rates and terms.
The Sunshine State is the top state for tourism, with 61% of Americans, and an estimated 4.6 million international tourists have visited Florida. Florida’s population has grown 15.6% since 2010, making it the fastest-growing state in the U.S. Job growth is estimated at 4.87%, with many available jobs in the service sector and tourism industry.
3. Mississippi
Mississippi has the third-weakest housing market in 2023, with only 5,784 existing home inventory and 7,687 new constructions. Despite the low housing supply, the state’s home prices remain low, with properties selling at a median price of $125,500, the second-lowest home price on our list. While this could be due to the low cost of living, the affordable prices could also suggest sluggish homebuying combined with its low inventory.
Vicksburg, Mississippi
The median household income in Mississippi is the lowest in our research at $46,511. High mortgage rates of 6.61% make it more challenging to buy a house in the Magnolia State. However, despite home prices increasing and salaries decreasing, someone earning the median income at the current interest rate, with a 5% down payment, can afford the median home price.
Mississippi ranks as the state with the weakest economy in 2023. Nevertheless, the state’s affordable homes, suburban lifestyle, low crime rate, and luscious parks and forests attract homebuyers who want to retire from expensive city living. Someone who works remotely and earns higher than the state median income could buy a house and live comfortably with the state’s record-low home prices.
4. West Virginia
West Virginia’s weak housing market is primarily due to its low inventory, low new construction, and decreased median household income. The number of homes available is 3,325. It is an increase of 35% from 2022, but very few homes are currently on the market.
Monongahela National Forest, West Virginia
New construction dropped to 3,256, a 16% decrease since last year. Despite this shortage, West Virginia houses sell at a median price of $123,200, the lowest in the country. It may indicate slower homebuying activity compared to other states. Household income is at $48,037. Mortgage rates of 6.56%, however, are relatively high. The median income and low home prices can afford a comfortable lifestyle despite high interest rates.
While The Mountain State is the 38th most populous state, its population has decreased by 0.5% over the past five years. The state also has the third-weakest economy in the country, ranking low in terms of employment, business, and overall growth. However, its lowest housing costs in the nation could make it an excellent state for retirees and remote workers to build or maintain wealth.
5. Arkansas
Arkansas, the Bear State, is undoubtedly seeing a bare real estate market in 2023. It’s new to the list this year and ranks as our fifth-weakest housing market by state. Median home prices are $133,600. Available homes increased 13% from last year, with 7,924 existing homes on the market.
Little Rock, Arkansas
New construction is down 4% over the past year, with 13,693 building permits issued. Household income of $49,475 dropped by 4% since 2022, and 30-year mortgage rates have increased to 6.7%. If someone could find an affordable home with its lower than average inventory, at the current interest rate and terms, the median income can afford these homes.
It has solid fiscal stability, coming in at 14 among all states. However, its economy is weak, ranking 41 out of 50 states. The quality of Arkansas health care is the worst in the U.S. In contrast, its opportunity score ranks 7 out of 50 for affordability.
Real Estate Housing Market Statistics 2023
Here’s the 2023 overall ranking for the strongest and weakest U.S. housing markets in all 50 states. We based our evaluation on median home prices, available inventory, new construction, household income, and 30-year fixed mortgage rates.
If you’d like to see all the information used to conduct our study, click here for all the data.
Overall Ranking | State | Median Housing Prices1 | Available Inventory2 | New Construction3 | Household Income1 | Mortgage Rates (30-year Fixed)4 |
|---|---|---|---|---|---|---|
1 | Texas | 31 | 2 | 1 | 21 | 22 |
2 | California | 2 | 3 | 3 | 6 | 13 |
3 | New York | 9 | 4 | 11 | 14 | 24 |
4 | New Jersey | 6 | 13 | 13 | 2 | 35 |
5 | Colorado | 4 | 12 | 7 | 11 | 17 |
6 | Washington | 5 | 17 | 8 | 9 | 22 |
7 | Massachusetts | 3 | 28 | 28 | 3 | 47 |
8 | Maryland | 8 | 26 | 27 | 1 | 33 |
9 | Georgia | 28 | 5 | 5 | 29 | 1 |
10 | Virginia | 12 | 16 | 12 | 10 | 5 |
11 | Arizona | 19 | 6 | 6 | 28 | 3 |
12 | Utah | 10 | 23 | 16 | 12 | 21 |
13 | North Carolina | 32 | 7 | 4 | 39 | 11 |
14 | Oregon | 7 | 25 | 26 | 18 | 13 |
15 | Illinois | 25 | 8 | 23 | 17 | 25 |
16 | Minnesota | 20 | 24 | 14 | 13 | 37 |
17 | Connecticut | 13 | 36 | 42 | 5 | 41 |
18 | Nevada | 11 | 19 | 22 | 26 | 10 |
19 | New Hampshire | 16 | 44 | 44 | 7 | 9 |
20 | Pennsylvania | 30 | 9 | 18 | 22 | 29 |
21 | Alaska | 15 | 48 | 49 | 8 | 29 |
22 | Tennessee | 33 | 11 | 10 | 42 | 29 |
23 | South Carolina | 36 | 15 | 9 | 41 | 4 |
24 | Michigan | 40 | 10 | 19 | 33 | 17 |
25 | Rhode Island | 14 | 47 | 50 | 15 | 43 |
26 | Delaware | 17 | 43 | 40 | 16 | 44 |
27 | Ohio | 43 | 14 | 15 | 36 | 20 |
28 | Wisconsin | 29 | 30 | 21 | 24 | 8 |
29 | Idaho | 21 | 32 | 24 | 34 | 25 |
30 | Indiana | 45 | 21 | 17 | 35 | 7 |
31 | Missouri | 39 | 18 | 20 | 38 | 40 |
32 | Wyoming | 24 | 50 | 47 | 20 | 37 |
33 | Vermont | 23 | 49 | 48 | 23 | 33 |
34 | Alabama | 44 | 20 | 25 | 45 | 17 |
35 | Maine | 27 | 42 | 39 | 32 | 2 |
36 | Montana | 18 | 39 | 41 | 40 | 45 |
37 | North Dakota | 26 | 46 | 45 | 19 | 48 |
38 | Nebraska | 38 | 38 | 34 | 25 | 35 |
39 | Iowa | 42 | 33 | 33 | 27 | 45 |
40 | Kansas | 41 | 35 | 36 | 30 | 28 |
41 | Hawaii | 1 | 40 | 43 | 4 | 50 |
42 | Louisiana | 37 | 22 | 29 | 47 | 29 |
43 | Oklahoma | 47 | 27 | 32 | 43 | 5 |
44 | South Dakota | 35 | 45 | 35 | 31 | 49 |
45 | New Mexico | 34 | 37 | 37 | 46 | 13 |
46 | Arkansas | 48 | 31 | 31 | 48 | 25 |
47 | West Virginia | 50 | 41 | 46 | 49 | 41 |
48 | Mississippi | 49 | 34 | 38 | 50 | 39 |
49 | Florida | 22 | 1 | 2 | 37 | 16 |
50 | Kentucky | 46 | 29 | 30 | 44 | 11 |
Table and text sources:
1 Median Housing Prices and Household Income from World Population Review
2 Existing Inventory from FRED
3 New Construction from Census.gov
4 Mortgage Rates from Business Insider
Previous Housing Market by State Rankings 2022
Research shows a shift in the housing market from 2022 to 2023. While several states have stayed among the strongest and weakest markets, we did see a shift in their rankings. Hawaii and North Dakota dropped off in 2023. Hawaii was the fifth-strongest state but was replaced by Colorado in 2023. North Dakota ranked third, while Mississippi took its place, and newcomer Arkansas was the fifth state with the weakest housing market in 2023.
Continue on to review the strongest and weakest markets in 2022 as compared to 2023:
5 Strongest State Housing Markets 2022
The best housing markets in 2022 had lower mortgage interest rates and higher incomes. In 2023, it changed. Interest rates climbed, while the median household income dramatically dropped in our five strongest picks.
5 Weakest State Housing Markets 2022
The five weakest housing markets predominantly suffered from a low number of available homes and new construction as mortgage rates continued to increase—but were much lower than today. Household incomes were also low in some states and dropped further in 2023.
How We Evaluated the Strongest & Weakest Housing Markets by State
To see which states have the best real estate markets, we analyzed the median home price, existing inventory, new construction, income levels, and mortgage interest rates per state. These crucial statistics are effective indicators of the health of a housing market.
To determine the strongest and weakest housing markets in 2023, we used these five data points:
- Housing prices: Housing prices are the biggest indicator of housing market health because the price is the primary criterion buyers use in property searches. Higher home prices indicate a “hot” market as the homes are in great demand.
- Available inventory: The available inventory in a given market is key. Lower inventory means less choice for the buyer and, generally, fewer purchases. Higher inventory creates a strong housing market, buyer interest, and financial health.
- New construction: New construction means community growth for middle-market or starter houses. New construction gives buyers with a limited budget more property choices and shows general housing market growth.
- Household income: Household income is key to homebuying. Lower incomes mean home purchases are less likely, while higher incomes make homebuying eminently possible. Higher incomes, then, indicate a stronger housing market.
- Mortgage rates: High mortgage rates are key to housing market health. While there are many reasons mortgage rates might be high, we considered high rates as an indicator of buyer demand for home loans, indicating a “hot” market. High mortgage rates, however, can be a disincentive to purchase.
Bottom Line
Texas was named the first state to buy a house in 2023. It has affordable home prices, a good amount of available homes, decent wages, and the population and jobs are growing. The worst state to buy a house is Kentucky. It has the lowest housing inventory and the highest mortgage interest rates. Income is low, and job growth increases are not expected.
