Many would-be home buyers across the country find today's near-record home prices simply unaffordable. The bright light coming through the sun porch in metro Detroit is that buyers here still need far less income than others in the rest of the country to buy a typical home.
OK, that's the ray of sunshine.
The storm clouds? Home buying demand was pretty miserable in much of metro Detroit in July — and things might not let up soon given a continued forecast for high interest rates.
Oddly enough home prices went up in metro Detroit, but demand once again went down, according to a new analysis of data released by Redfin, a well-known residential real estate brokerage based in Seattle. Detroit-based Rocket Companies finalized its $1.75 billion purchase
of the Redfin platform in July 2025.
The median home sale price in metro Detroit, according to Redfin's figures: Up 6.7% year over year in July.
Home sales in metro Detroit, according to Redfin: Down 9.3% year over year in July.
"What we're seeing now with home sales slowing down and active listings piling up, that tells me that price growth is going to have to slow down," Daryl Fairweather, chief economist for Redfin, told the Detroit Free Press.
First-time home buyers might see some relief, she said, as wages are expected in many areas to grow faster overall than home prices.
Metro Detroit's mixed economic bag
The metropolitan statistical area being reviewed by real estate experts encompasses the Detroit-Dearborn-Livonia division. It's wide-sweeping area that tracks the Detroit River and parts of Lake St. Clair to the east, but it does not include St. Clair Shores, Warren, Madison Heights, Southfield, Farmington Hills, and Novi.
According to a Moody's Analytics report in June, the area continues to lose economic ground. Manufacturing is expected to remain subdued by tariffs. The Moody's report also indicated that the "resurgence of fighting in Iran keeps oil prices elevated for longer, hurting automakers’ bottom lines and demand."
Even so, housing price growth in the Detroit-Dearborn-Livonia metropolitan division is ahead of the Michigan and U.S. averages, according to Moody's, thanks to tight inventory of homes for sale and a "lingering affordability edge."
Mark Zandi, chief economist at Moody's Analytics, told the Detroit Free Press that one cannot read too much into weaker housing sales for one month in July. But he said it is clear the area faces economic pressures, including tariffs and high oil prices that threaten the auto industry, a multiyear recession for the freight trucking industry, and persistent weakness in manufacturing.
Zandi suspects that the Detroit housing market may be even more bifurcated when it comes to wealthier consumers at the top, who may be able to afford higher house prices and interest rates, and lower income households at the bottom.
"Higher mortgage rates along with higher cost of living may be particularly binding at the lower end of the income distribution," Zandi said.
Even so, Zandi said, Moody's Analytics views housing prices as meaningfully overvalued by 21.9% in the second quarter in the Detroit-Dearborn-Livonia division. Another area including Detroit, Warren and Dearborn is overvalued by 24.69%, according to Moody's.
The metropolitan statistical area, which includes Warren, Troy and Farmington Hills, is overvalued by about 28% in the second quarter.
The risk is that home prices in overvalued markets could barely grow into the next decade, Zandi said, which would allow incomes to catch up to house prices. Over time, valuations of home prices would normalize.
House prices took off during the pandemic, Zandi said, when mortgage rates hit generational lows and households sheltering in place wanted more space.
"House price increases far outpaced household income gains, resulting in the overvaluation that has persisted since," Zandi said.
Would-be home buyers might have more options
To be sure, a 9.3% drop isn't the worst that metro Detroit has ever seen. Redfin's Fairweather noted that metro Detroit saw a 25% decline in home sales in November 2022 as mortgage rates spiked to hover in the 7% range for much of the month.
If you're shopping for a home in metro Detroit now, you may have more wiggle room for negotiating as home sales cool down.
If that home has been lingering on the market for two weeks or more, Fairweather said, buyers should feel comfortable making an offer that is below asking price, maybe even 3% or 4% below asking price.
"The homes that sell right away, those are the ones that are selling at asking price," Fairweather said.
You can negotiate beyond just the sales price, Fairweather said. If a home has been on the market for a while, she said, you can feel more comfortable making an offer that includes an inspection contingency. Or you ask for seller concessions at closing, perhaps to cover closing costs. Maybe, you want to ask if the home purchase timeline stretches out beyond the typical 30 days or 45 days, if that works in your favor.
"Figure out what you can ask for. And don't be shy about asking for it in this kind of a market," Fairweather said.
The median days homes listed on the market — meaning half sold more quickly and half lingered longer — was 32 days in metro Detroit before selling in July, up five days from the same time a year ago.
Home sales nationwide dropped in July to the lowest level in two years, according to Redfin, falling 0.6% year over year and dropping 4.1% from June to July.
Typically, the real estate industry sees an uptick in August, as home buyers make a last push to lock down a new home purchase before the school year kicks off.
Metro Detroit home demand ranks among the lowest in country
Metro Detroit ranks in the top five metro areas where buying demand was down in July, according to the Redfin analysis.
Metro Detroit ranked No. 4 and saw home demand fall 9.3%. Seattle was No. 5 with home demand dropping 9.1% year over year in July, according to Redfin's data.
Home sales fell fastest in the Texas–San Antonio area, down 12.6% year over year in July. Dallas dropped by 10% and Fort Worth fell by 9.9%.
The slowdown in the Texas housing market is attributed a lot of options for buyers after years of homebuilding, enabling shoppers to take more time and negotiate lower prices. In some neighborhoods in Texas communities, according to Redfin agents, sellers are also competing with builders offering incentives on new homes.
Redfin analysts highlighted that Seattle saw the fastest drop among the group for pending home sales, likely reflecting fears of more layoffs in the tech industry on top of already sky high house prices. The median sale price in the Seattle area was $809,479 in July.
Fairweather, the economist for Redfin, said the metro Detroit area has tended toward more sluggish home sales essentially since late 2024, reflecting high mortgage rates and the affordability picture starting to worsen.
Why home prices went up
On the surface, it doesn't seem to make sense that median prices would keep going up when sales are down. Several factors come into play here, including that a well-priced house in a desirable neighborhood is likely to sell quickly for a higher price.
Fairweather noted that the increase in the median price in metro Detroit was shored up by a strong desire for homes that will not need a great deal of repairs or require much work.
"The move-in ready homes that have already been fixed up that are suitable for families, those are selling quickly and for higher prices than homes that need work," Fairweather said.
Buyers know what they want and some might say that they're getting pickier about it.
A lack of new listings, Fairweather said, also pushes up prices. Some existing homeowners, she noted, don't want to sell because they'd lose 3% or 4% mortgage rates that they locked in during the early days of the pandemic.
Some well-off consumers are not on super-tight budgets. And they may be able to afford to buy at higher prices.
"In this economy, there are some people who are struggling a lot with higher inflation and higher interest rates," Fairweather said.
"And there are some people who feel more immune to that because they have stock market wealth and they're selling a house to buy their next house, and they can navigate around high interest rates."
Metro Detroit remains a spot where affordability is good
Many potential home buyers face an income gap — earning less than they need in order to spend no more than 30% of their income on housing. The income gap can grow as home prices climb.
In the metro Detroit area, the income needed to afford the typical home is $66,999, up 4% year-over-year, according to Redfin's analysis.
Fortunately, Detroit's estimated median income is $65,687 — which Redfin experts say puts the share of income required to buy a home around 30.6%.
The share of listings in Detroit that would be affordable to the median-earning household is 62.6%, the highest share of the 50 most populous metros, according to the Redfin analysis.
While affordability improved in 24 of 46 U.S. markets reviewed in a Redfin analysis, it did not improve in the metro Detroit market, going up slightly. But the Detroit market remains an affordable market by comparison to other parts of the country, according to Redfin.
The typical U.S. consumer would need to spend 38% of their income on the typical median-priced home nationwide, according to an earlier Redfin analysis. And only 34% of U.S. listings would be affordable to them.
Nationwide, potential home buyers need to earn $109,796 to afford the typical U.S. home that is for sale, down 0.5% from an all-time high of $110,382 a year ago, according to Redfin. The median household income was an estimated $87,599 across the country, up 4% year over year.
In the metro Detroit area, the median home sale price rose 6.7% year over year to $230,881 in July. Yet, metro Detroit's median home sale price is roughly 43% less than the median home sale price nationwide.
The median home sale price in the United States rose 3.2% year over year to $407,730, the highest July level on record, according to the Redfin analysis. The monthly average mortgage rate rose to a one-year high of 6.54% in July.
The U.S. weekly average for the 30-year mortgage was 6.67% for the week of Aug. 13, according to FreddieMac. That's up from 6.58% from a year ago at this time.
The reality, of course, is that many homes on the market require repairs and extra care, which drive up the cost of homeownership overall. Much depends on what homes are listed in your price range in communities in your area.
The picture in Detroit — if you're only looking at these numbers — might seem more optimistic when the median priced home was $230,881 in July. But other challenges exist for many potential buyers.
A long list of issues could have left potential home buyers on the sidelines in July — economic uncertainty, federal tariffs that put some jobs in Michigan at risk, record-breaking heat and wildfire smoke in July that slowed much business activity, ongoing concerns that household budgets cannot keep up with rising prices. Hundreds of Michigan employees at some major businesses discovered this spring and summer that they would be let go from the payroll — including some employees at Fifth Third Bank, the Compass Group and Rec Boat Holdings.
And yes, more monthly-payment-sensitive home buyers might have thought twice about buying in July as mortgage rates creeped up with concerns about inflation.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
This article originally appeared on Detroit Free Press: Metro Detroit home prices kept going up, even as home sales tumbled
