US housing market shifts as affordability issues drive rental migration

High mortgage rates and an affordability crisis are reshaping the United States housing market. According to data from Zillow, home sales dropped 0.6% year-over-year in August, while newly pending listings fell 2.6%. While high monthly costs—with a typical mortgage payment reaching $1,897—are deterring many buyers, the slowdown has created opportunities for active participants. Buyers currently face more inventory, with 1.41 million homes for sale, and 26.3% of listings have seen price cuts.

As high home prices push potential buyers back into the rental market, a migration trend is emerging. Zillow reports that renters are increasingly searching for apartments outside their current metro areas. Cities seeing the largest surges in out-of-town rental searches include Buffalo, Chicago, and Houston, followed by New Orleans and Dallas. In markets such as Salt Lake City, Raleigh, Hartford, and Nashville, out-of-town rental searches already outnumber local ones. Zillow Chief Economist Mischa Fisher noted that these rental trends often serve as a precursor to future home sales activity in those regions.