Indiana Takes Top Slots

Lafayette, Ind., held its spot at the top of The Wall Street Journal/Realtor.com Emerging Housing Markets Index for the third straight quarter as affordable Midwestern cities continue to attract home-shopping demand.

Three Indiana metro areas topped the index in the second quarter—Lafayette, Fort Wayne and Elkhart—followed by Bloomington, Ill., and Sioux City, Iowa.

Elevated mortgage rates have slowed the housing market in the past year and a half by making purchases more expensive for many buyers and by discouraging homeowners from listing their houses for sale. Existing home sales, which make up most of the housing market, fell 18.9% in June from a year earlier, according to the National Association of Realtors. 

While the higher rates have discouraged many buyers, the persistent low inventory of homes for sale means that the market is still competitive for those buyers who are shopping.

The top-ranked markets in the second quarter had faster home sales than the market as a whole, according to Realtor.com. Across the top 20 markets in the index, the number of homes for sale rose by 16% on average in the year ended in June compared with the prior year, below the national increase of 40%.

The index identifies the most attractive metro areas for home buyers seeking an appreciating housing market, a strong local economy and appealing lifestyle amenities. News Corp, parent of the Journal, operates Realtor.com.

Sixteen of the top 20 markets in the second-quarter index had median home listing prices in June below the national median of $445,000.

“Buyers continue to zone in on affordable areas,” said economists at Realtor.com in an analysis. “While the market has slowed, it has not come to a full stop.”

People are moving to the Lafayette metro area, which has about 225,000 residents, because of its strong job market, said Tamara House,

While inventory has increased in recent weeks, “demand is still extremely high,” she said. “I’ve got buyers that I can’t show them inventory, because it’s just not there.”

The median home-sale price in Indiana’s Tippecanoe County, which includes Lafayette, was $292,000 in June, up 10.5% from a year earlier, according to the Indiana Association of Realtors. The national median existing-home sales price in June was $410,200.

The relative affordability of many of the second quarter’s top-ranked markets is also attracting new residents. People moved during the pandemic to the Portland, Maine, area, which was 15th in the rankings, because it was cheaper than some larger East Coast cities such as Boston and New York. That migration is still driving demand, because people who chose to rent when they first moved are now trying to buy homes, said Holly Mitchell, a real-estate agent at Keller Williams in Portland.

In the city of Portland, active listings in the first six months of the year fell 45% from the same period last year, Mitchell said. “The spring market just never came,” she said. “We were waiting for it, and it didn’t show up.”

The Wall Street Journal/Realtor.com Emerging Housing Markets Index ranks the 300 biggest metro areas in the U.S. In addition to housing-market indicators, the index incorporates economic and lifestyle data, including real-estate taxes, unemployment, wages, commute time and small-business loans.

Twelve of the second quarter’s top 20 markets were also ranked in the top 20 in the first quarter. Some markets that entered the top 20 in the second quarter were South Bend, Ind., Portland and Akron, Ohio.

Write to Nicole Friedman at [email protected]