Limited housing supply and steady demand drove the increase, with New York registering the biggest annual gain among 20 metros.
“Home price growth continued to decelerate on an annual basis in March, even as the market experienced its strongest monthly gains so far in 2025,” said Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones Indices.
The housing market is shifting from “mere resilience to a broader seasonal recovery,” he said.
“Limited supply and steady demand drove prices higher across most metropolitan areas, despite affordability challenges remaining firmly in place,” he said.
Among the 20 metros tracked, New York City registered the highest annual gain in March, with prices up by 8 percent. Chicago and Cleveland were the next highest.
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Tampa was the only metro to register a year-over-year drop, with prices dipping by 2.16 percent. The second worst-performing metro was Dallas, which saw a marginal 0.19 percent annual gain.
According to Godec, while housing affordability continues to remain “severely constrained,” affordability did not worsen during the early part of this year because borrowing costs stabilized.
“Mortgage rates hovered in the mid-6 percent range throughout March, keeping monthly payment burdens near multi-decade highs relative to incomes,” he said. “This continued to weigh on buyer demand.”
However, he said, “persistent supply shortages helped counteract the headwinds. Many existing homeowners remained reluctant to sell and give up low pandemic-era mortgage rates, and new construction activity stayed limited—a combination that kept inventory levels extremely tight.”
However, sales lagged during the month, resulting in the share of listings offering price cuts hitting the highest March level in six years.
This trend continued in April, with 25 percent of homes listed on Zillow receiving a price cut, the post said.
Buyers “now have more homes to choose from. There are 1.2 million homes for sale in April—the most since August 2020,” Zillow said. “A price correction is expected to result in a modest recovery in sales over the coming year.”
Possible Trend Toward Affordability
Housing affordability could improve this year as home prices and mortgage rates potentially decline.
“It’s a buyer’s market. That means homebuyers in many parts of the country are able to successfully negotiate prices down, especially for fixer-uppers and/or homes that aren’t located in desirable neighborhoods,” it said.
“The longer the market is slow, the more sellers will come to terms with the fact that they can’t sell their homes for what they could have at the height of the market.”
Together with the 1 percent expected dip in home prices, wages are projected to keep rising at the current rate of roughly 4 percent, contributing to improving affordability.
“With more inventory for buyers to choose from than the last few years, purchase application activity continues to hold up.”
With lower home prices and mortgage rates predicted by year-end, many buyers who have been sitting on the sidelines could re-enter the housing market.
