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. New Jersey and California are at the top with the strongest housing markets by state, while West Virginia and Oklahoma 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 with the best (and worst) real estate markets.
Top 5 Strongest Housing Markets by State
The five best real estate markets in the U.S. have seen an increase or rank higher in median home prices, number of homes available, new construction, and median household income. The best real estate states also have suffered less impact from the increasing mortgage rates and current housing market than other states. Read on to see if your state made it into the top five:
1. New Jersey
New Jersey came first in real estate rankings by state in 2023 and is the best state to buy a house for real estate investing. New Jersey’s available housing inventory dropped by 31.26% compared to the same month last year, with 12,804 homes waiting for new owners as of August 2023. However, the median home price has gone up this year by $8,000 and is now $425,019.
Atlantic City, New Jersey
As of August 2023, there are 23,405 new developments available, up 15.868% from the previous month. Mortgage rates have increased in the Garden State to 7.32%, and the median household income of $89,703 (second-highest) experienced a 20% drop. Median income earners could afford median-priced homes at the current rates and terms.
There’s a year-over-year (YOY) job growth of 2.5%, which may encourage new homebuyers and investors in need of real estate professionals in New Jersey. 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.
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 as of August 2023 is 41,612 (third-highest), while the new construction is down to 77,283 (third-highest) new developments, which increased by 17.177% compared to last month.
Golden Gate Bridge in San Francisco, California
California still has a healthy supply of available homes, putting it in third place compared to other states. However, median home prices of $750,080 (first) and interest rates make it challenging to find affordable housing. The median household income in 2023 is $84,097, and California’s current mortgage interest rates are at 7.59%, up from 4.39% in 2022. These factors contributed to California dropping from first place to second in 2023.
California’s population decreased by 0.29% and has been predicted to decline due to the pandemic and emigration. It’s the first-most populated state in the U.S., and the state boasts a 2.8% YOY job growth. As the second of the top best real estate markets in the U.S., with its healthy employment outlook, it is a good time to invest in real estate and an excellent time to become a real estate agent in California.
3. Virginia
Virginia comes third as the best U.S. housing market by state in 2023. With an existing home inventory of 12,628 (as of August 2023), the available houses for sale have slightly dipped compared to last year at 14,776. It has seen an increase of about 15.296% in new construction this August 2023 (23,696) compared to last month (20,329). With this upsurge, Virginia has more new construction than any other state, so buyers looking for a brand-new home or planning to move will find a growth of available housing.
Virginia Beach, Virginia
The median household income in 2023 is $80,615, and the median home price is $385,038. The average mortgage interest rate jumped from 3.07% in 2021 to 7.31% in 2023, but mortgage interest rates have significantly increased nationwide over the last year.
The population has grown by about 0.6% since 2020 and will continue as more people need housing. With the continuous increase of emigration, it’s an excellent time to become a real estate agent in Virginia. Employment growth increases by 2.4% YOY, so if you’re moving to Virginia, you should be able to find employment.
4. Georgia
In fourth place, Georgia joined the states with the best housing markets in the U.S. this year. The median income of the Peach State is $65,030, and the available homes for sale are currently at 25,363, which has seen a drop of 10.7% from September 2022.
Midtown Atlanta, Georgia
New construction increased by 13.7% to 45,121 developments over the last month. The median cost to buy a home in Georgia is $350,471. As with every state, mortgage rates have increased, with its 30-year fixed rate of 7.34%. Because housing prices have declined alongside income, Georgians should be able to buy a house with current rates and terms.
Its projected employment growth rate of 2.8% isn’t the highest in the country, but it indicates there are available jobs if you plan to buy a house in Georgia. It experienced a 1.9% population increase in the last year. Additionally, more than 4,000 people were searching to move into the state versus out of the Peach State.
5. New York
You may have heard of “the city that never sleeps,” which is directly connected with the fact that New York is the fifth-place winner of the best housing market in the U.S. Its existing home inventory as of August 2023 is 34,312, which dropped by 13.39% compared to last year, so there are still homes to snatch up even in the current low inventory market. New construction increased over the previous month to 18,368, which is 2,811 units more than a month ago.
Statue of Liberty and Lower Manhattan, New York
The Empire State has a median annual household income of $70,663, and the median home price is now $449,924. The current mortgage interest rate is 7.50%, up from 4.39%. It ranks fourth with the highest home inventory and ninth with the median home price.
New York’s population decreased by 2.6% from 2020 to 2022, the most significant decrease in the country during the pandemic. Regardless of this dip, the state has a predicted job growth rate of 2.9%, potentially creating a need for homes. Thus, there’s huge potential for those inclined to become a real estate agent in the Big Apple.
If you’re thinking of becoming a real estate agent in New York, it’s important to know that it has no reciprocity agreements with any state. However, if you have completed a qualifying education outside the state, you can request a waiver for the course(s) required for the state license. Check out our article 50 State Real Estate License Reciprocity & Portability Guide 2023 for more information.
5 Weakest State Housing Markets
Shifting from the best states to buy real estate, the five worst housing markets in the U.S. 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, which makes it difficult to afford homes, even with lower home prices. Read on to see if your state is included in the worst five state markets:
1. West Virginia
West Virginia’s weak housing market is primarily due to its low inventory, low new construction, and decreased median household income. There is a tight inventory of 2,941 existing homes and only 2,361 new constructions available. The average household income is $50,884, ranking 49th-lowest overall.
Seneca Rocks in West Virginia
Still, someone earning the median salary in West Virginia can afford the median home price of $214,446, one of the states with the most affordable housing, at the current 30-year fixed rate mortgage of 7.39%. This mortgage rate is higher than the rates of four of the five best states to buy real estate (except New York), but it balances out due to low home prices.
Anticipated job growth is to increase to 0.4%, the lowest in our research, but there should still be room for real estate agents to get new listings. Its population shows a 1.0% decrease from 2020 to 2022. Plus, more than 1,000 people were searching to move out of the state.
2. Oklahoma
Amid the relatively moderate volume of homes available on the market, Oklahoma struggles with housing shortages as the population booms. The Sooner State has a relatively low inventory of 9,936 and has new construction homes of 9,068, ranking 24th and 30th, respectively.
Turner Falls in Davis, Oklahoma
However, since the soaring demand outpaces supply, prices have climbed, with homes selling at a median price of $233,548. Mortgage rates continue to surge at 7.70%, ranking third-highest overall. The average household income is $56,956, but it’s enough to afford a median-priced Oklahoma home at prevailing rates and terms. Oklahoma’s population has grown by 1.5% since 2020, and its job growth is estimated at 2.7% year-over-year (YOY), potentially developing a need for homes in the future.
3. Iowa
Iowa has the third-weakest housing market in 2023, with only 7,116 existing home inventory and 7,160 new constructions. Despite the low housing supply, the state’s home prices remain low, with properties selling at a median price of $248,260, the eighth-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.
Skyline of Des Moines, Iowa’s capital and largest city
The median household income in Iowa is $65,429, and the mortgage rate is at 7.86%, the highest overall in our research, making it more challenging to buy a house in the Hawkeye State. While the state is the 32nd most populous state, its population has increased by 5.15% over the past years. Also, it recorded a 1.5% increase in job growth YOY. This could spark a need for more housing and a good time to become an Iowa real estate agent.
4. South Dakota
The Mount Rushmore State ranks fourth as the weakest real estate market in 2023 for its very low home inventory, ranking 43rd (2,818), and high mortgage rates at 7.66%, the fifth-highest 30-year mortgage rate overall. The new construction grew to 4,772, a 17.378% increase from last month.
Mount Rushmore in the Black Hills, South Dakota
Despite this shortage, South Dakota houses sell at a median price of $338,389. It may indicate slower homebuying activity compared to other states, as household income is also low at $63,920 (31st). However, the median income and relatively low home prices can afford a comfortable lifestyle despite high interest rates.
5. Missouri
Missouri, the Show-Me 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 $239,939, the fifth-lowest overall, and the available homes increased significantly from last year, with 12,263 existing homes on the market.
Gateway Arch monument in St. Louis, Missouri
New construction is down, with 11,770 building permits issued. Household income of $61,043, ranking 38th-highest, and 30-year mortgage rates have increased to 7.75%, second-highest overall. 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 12 among all states. However, its economy is weak, ranking 30 out of 50 states. The quality of Missouri’s crime and correction is among the worst in the U.S. In contrast, its opportunity score ranks 14 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 | New Jersey | 12 | 15 | 12 | 2 | 9 |
2 | California | 1 | 3 | 3 | 5 | 42 |
3 | Virginia | 17 | 18 | 11 | 9 | 8 |
4 | Georgia | 19 | 5 | 5 | 49 | 12 |
5 | New York | 9 | 4 | 14 | 16 | 27 |
6 | Colorado | 3 | 10 | 9 | 11 | 44 |
7 | Texas | 20 | 2 | 1 | 18 | 36 |
8 | Washington | 5 | 17 | 10 | 8 | 40 |
9 | Maryland | 16 | 29 | 20 | 1 | 18 |
10 | Tennessee | 23 | 7 | 7 | 41 | 13 |
11 | Utah | 10 | 27 | 17 | 12 | 29 |
12 | Florida | 18 | 1 | 2 | 37 | 38 |
13 | Alaska | 22 | 16 | 50 | 10 | 2 |
14 | Massachusetts | 4 | 33 | 29 | 3 | 31 |
15 | Hawaii | 2 | 40 | 44 | 4 | 14 |
16 | South Carolina | 28 | 12 | 8 | 42 | 16 |
17 | Oregon | 7 | 21 | 21 | 17 | 43 |
18 | North Carolina | 30 | 6 | 4 | 40 | 30 |
19 | Pennsylvania | 36 | 8 | 18 | 23 | 26 |
20 | Arizona | 11 | 28 | 6 | 26 | 41 |
21 | Minnesota | 31 | 22 | 16 | 13 | 34 |
22 | Nevada | 14 | 25 | 22 | 27 | 32 |
23 | Idaho | 6 | 30 | 24 | 32 | 35 |
24 | New Hampshire | 15 | 47 | 42 | 7 | 19 |
25 | Delaware | 21 | 46 | 39 | 14 | 11 |
26 | Arkansas | 32 | 13 | 31 | 48 | 10 |
27 | Illinois | 38 | 9 | 25 | 15 | 47 |
28 | Ohio | 49 | 14 | 13 | 36 | 24 |
29 | Rhode Island | 13 | 50 | 49 | 19 | 5 |
30 | Michigan | 48 | 11 | 28 | 33 | 21 |
31 | Connecticut | 25 | 38 | 40 | 6 | 33 |
32 | Wisconsin | 39 | 26 | 32 | 24 | 23 |
33 | North Dakota | 35 | 45 | 46 | 20 | 1 |
34 | Montana | 8 | 36 | 43 | 39 | 25 |
35 | Indiana | 42 | 23 | 15 | 35 | 37 |
36 | Wyoming | 37 | 44 | 48 | 21 | 3 |
37 | New Mexico | 29 | 37 | 35 | 46 | 7 |
38 | Louisiana | 45 | 19 | 27 | 47 | 17 |
39 | Alabama | 40 | 48 | 19 | 45 | 4 |
40 | Kentucky | 44 | 31 | 26 | 44 | 15 |
41 | Mississippi | 41 | 34 | 37 | 50 | 6 |
42 | Kansas | 26 | 35 | 34 | 30 | 45 |
43 | Vermont | 24 | 49 | 47 | 22 | 28 |
44 | Maine | 33 | 41 | 41 | 34 | 22 |
45 | Nebraska | 34 | 39 | 36 | 25 | 39 |
46 | Missouri | 46 | 20 | 23 | 38 | 49 |
47 | South Dakota | 27 | 43 | 38 | 31 | 46 |
48 | Iowa | 43 | 32 | 33 | 28 | 50 |
49 | Oklahoma | 47 | 24 | 30 | 43 | 48 |
50 | West Virginia | 50 | 42 | 45 | 49 | 20 |
Sources:
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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 New York in 2023. North Dakota ranked third, while Iowa took its place, and newcomer Missouri 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 Best Real Estate Markets in the U.S. 2022
The best real estate markets in the U.S. back 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 real estate 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 (20%): Housing prices are the biggest indicator of housing market health because the price is the primary consideration buyers look into in property searches. Higher home prices indicate a “hot” market as the homes are in great demand.
- Available inventory (20%): 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 (20%): New construction means community growth for middle-market or starter houses. It gives buyers with a limited budget more property choices and shows general housing market growth.
- Household income (20%): 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 (20%): 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
New Jersey was named the first best state to buy a house in 2023. It has affordable home prices, a good amount of available homes, and decent wages, and the population and jobs are growing. The worst state to buy a house is West Virginia. It has the lowest median home prices and the second-lowest median household income. The number of homes available and new construction is low, and the mortgage rates are quite high.
