Q 1 – National and Local Overview
Hard to believe that the first Quarter is in our rearview, but there are some interesting trends developing nationally and locally. Without further ado, let’s get to it.
The residential real estate market today is navigating an unusually complex landscape shaped by rising interest rates, long-standing supply constraints, demographic shifts, and emerging environmental risks. These pressures are playing out across the country but take on distinct characteristics in regional hotspots like North Carolina’s Triangle region, where growth has outpaced infrastructure and affordability is under increasing strain.
One of the most immediate concerns nationally—and in the Triangle—is the continued impact of elevated mortgage rates. With 30-year fixed mortgage rates hovering around 6.6%, monthly housing costs have surged for prospective buyers. In the Triangle, this translates into a significant slowdown in first-time homebuyer activity, especially in once-affordable submarkets like Durham and portions of southeast Raleigh. According to Triangle MLS, monthly home sales volume dropped nearly 18% year-over-year as of Q1 2025, even as prices remain high. Median home prices in Wake County hover around $450,000, with Orange County even higher due to limited inventory and tight land use restrictions.
A chronic housing shortage is another pressing concern, and the Triangle is no exception. Despite being one of the most active construction markets in the Southeast, supply hasn’t kept up with in-migration. The region has added over 120,000 residents since 2020, driven by tech sector expansion, universities, and quality of life advantages. However, new housing delivery is bottlenecked by labor shortages, rising land and materials costs, and strict zoning in desirable areas like Chapel Hill and Cary. The result: a tight resale market and limited affordable inventory, particularly for buyers under $350,000.
Affordability pressures are particularly acute in Durham, where prices have risen faster than local wages. Median household income in Durham is approximately $72,000, yet median home prices are above $420,000. According to Redfin, homes in Durham receive multiple offers and typically sell in just over 40 days, creating a market that is competitive but increasingly out of reach for local buyers. Renters face similar stress: rental rates in Raleigh rose nearly 6% year-over-year in early 2025, outpacing inflation and wage growth.
Meanwhile, economic uncertainty driven by national trends—like tariff increases and election-year volatility—has made both consumers and developers more cautious. Construction starts are slowing despite strong demand, and land prices in Johnston and Chatham counties are climbing as developers push outward in search of buildable lots. These rising costs feed directly into higher home prices, even in exurban areas once considered affordable.