Housing Market Momentum in August 2025: Signals for Investors

The U.S. housing market in August 2025 reflects a complex interplay of cooling demand and persistent price resilience, offering investors a unique window to identify undervalued opportunities. According to the RE/MAX National Housing Report for August 2025, home sales fell 1.6% year-over-year and 5.5% month-over-month, signaling a moderation in buyer activityRE/MAX National Housing Report for August 2025^[1]. However, this slowdown masks a critical trend: while sales volume wanes, price growth remains stubbornly intact, with the national median sales price rising 1.9% to $448,000—the 26th consecutive month of annual gainsRE/MAX National Housing Report for August 2025^[1]. For investors, this divergence between transaction volume and price momentum suggests a market in transition, where strategic entry into specific regions could yield outsized returns.

A Stabilizing Sector: Inventory and Pricing Dynamics

The report underscores a key structural shift: inventory levels have surged 24.4% year-over-year, yet the months' supply of housing remains at 2.8, still below the 5–6 months typically considered a balanced marketRE/MAX National Housing Report for August 2025^[1]. This imbalance, coupled with homes spending an average of 47 days on the market (eight days longer than the previous year), indicates lingering buyer cautionRE/MAX National Housing Report for August 2025^[1]. Meanwhile, the average 99% of asking prices paid by buyers highlights a market where sellers retain pricing power despite reduced competitionRE/MAX National Housing Report for August 2025^[1].

This dynamic creates a paradox: while broader market activity slows, localized demand is intensifying in pockets where affordability and economic fundamentals align. For instance, Pittsburgh, Pennsylvania, exemplifies this trend. With a median home price of $270,000—nearly 40% below the national average—the city offers a compelling value propositionRE/MAX National Housing Report for August 2025^[1]. Its diverse neighborhoods, cultural amenities, and proximity to educational institutions are attracting buyers seeking affordability without sacrificing quality of lifeRE/MAX National Housing Report for August 2025^[1].

Undervalued Markets: The Case for Strategic Entry

The RE/MAX report identifies several markets where price resilience and emerging demand converge. Cleveland ($260,000), Wichita ($260,000), and St. Louis ($287,750) join Pittsburgh as cities with median prices far below the national benchmark, yet experiencing year-over-year price increasesRE/MAX National Housing Report for August 2025^[1]. These markets are further bolstered by low housing payment-to-income ratios. Detroit, for example, has a ratio of 17.0%, compared to the national average of 36.3%, making it one of the most affordable major citiesRE/MAX National Housing Report for August 2025^[1].

J.P. Morgan Research forecasts a 3% rise in home prices for 2025, albeit against a backdrop of high mortgage rates that are expected to ease only marginally to 6.7% by year-endThe Outlook for the U.S. Housing Market in 2025 - J.P. Morgan^[2]. This "lock-in effect"—where homeowners with low rates avoid selling—further constrains inventory, keeping prices elevatedThe Outlook for the U.S. Housing Market in 2025 - J.P. Morgan^[2]. For investors, this means that undervalued markets with strong fundamentals are likely to outperform as supply constraints persist.

Morgan Stanley's 10-year outlook reinforces this view, noting that labor shortages and rising construction costs will continue to limit new housing supply, pushing demand toward rental markets and single-family rentals in the Midwest and SouthUS Housing Market 10-Year Outlook for Investors | Morgan Stanley^[3]. Cities like Buffalo, New York, and Oklahoma City, Oklahoma, are already benefiting from economic revitalization. Buffalo's "Buffalo Billion" initiative has attracted businesses and residents, while Oklahoma City's low living costs and growing energy and tech sectors are driving demandThe Most Undervalued Real Estate Markets for 2025^[4].

Strategic Considerations for Investors

To capitalize on these trends, investors must prioritize markets where affordability, economic diversification, and infrastructure development align. For example, Detroit's Housing Market Index (HMI) surged 10.1 points year-over-year to 70.7, reflecting growing buyer confidenceRE/MAX National Housing Report for August 2025^[1]. Similarly, St. Louis and Cleveland are seeing price stability amid broader economic uncertainty, suggesting resilience in the face of macroeconomic headwindsRE/MAX National Housing Report for August 2025^[1].

However, investors must also account for risks. Elevated mortgage rates and constrained inventory could prolong the transition to a balanced market, while labor shortages may delay new construction in high-growth areas. Diversifying across asset classes—such as single-family rentals in undervalued markets—can mitigate these risks while aligning with long-term demographic shiftsUS Housing Market 10-Year Outlook for Investors | Morgan Stanley^[3].

Conclusion

The August 2025 housing market presents a nuanced landscape for investors. While national sales activity has cooled, price resilience and affordability in select markets signal early-stage opportunities. By focusing on cities like Pittsburgh, Detroit, and Buffalo—where economic revitalization, low costs, and emerging demand converge—investors can position themselves to benefit from a sector poised for stabilization and gradual growth. As J.P. Morgan and Morgan Stanley both note, the path forward will be shaped by supply-side constraints and shifting buyer preferences, making strategic entry into undervalued markets a prudent approachThe Outlook for the U.S. Housing Market in 2025 - J.P. Morgan^[2]US Housing Market 10-Year Outlook for Investors | Morgan Stanley^[3].