As Interest Rates Rise, the Housing Market Is Becoming More Localized, Experts Say

As mortgage rates have risen over the last several months, the U.S. housing market has become increasingly divided, with some metro areas seeing steady growth and strong competition despite falling sales and declining prices in others. While pricey western markets are seeing prices fall the fastest, the housing market isn’t just split from coast to coast.

Housing demand varies even between cities and their respective suburbs, Realtor.com reports. Home prices are falling in downtown Philadelphia and Baltimore, among other major cities, but bidding wars are gaining steam outside the city limits in more desirable suburban neighborhoods.

Buyers who are priced out of urban downtowns might turn toward smaller cities or close-in suburbs that boast short commutes, bustling Main Streets, and good schools. Since there is typically limited land available in these towns on which to build new homes, competition among buyers remains fierce. That’s led to rising prices, even while just a few miles away in bigger cities, prices may have fallen a bit.

“For home shoppers, it’s good to be aware of national trends,” says Danielle Hale, chief economist for Realtor.com. “But those national trends might not match for the homes that they’re shopping for at the prices they’re looking at in the neighborhoods they’re searching in.”

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