Following the September 2025 interest rate cut, the Northeast real estate market is seeing steady prices and increasing inventory, but high mortgage rates continue to affect affordability. Compared to other regions, the Northeast has one of the strongest "seller's markets," with high demand absorbing available homes relatively quickly. 

Market conditions in the Northeast

• Strong price growth: The Northeast, along with the Midwest, continues to experience steady home price increases. This contrasts with markets in the Sun Belt, which have seen some price softening.

• Relatively low inventory: While inventory is rising across the country, supply in the Northeast remains relatively tight. The "lock-in effect"—homeowners with low mortgage rates who are hesitant to sell—is still limiting the number of available homes.

• Persistent seller's market: The combination of steady prices and low inventory keeps the market competitive. Regional analysis shows the Northeast has a high absorption rate, meaning homes sell quickly compared to the national average. 

Effects of the rate cut

• Slight mortgage rate relief: The Federal Reserve's rate cut in September 2025 is helping to ease mortgage rates, but they are not expected to drop dramatically. Economists project rates will likely remain in the mid-to-high 6% range through the rest of the year.

• Limited affordability boost: Although lower rates offer some relief, they are not enough to significantly boost affordability for many potential buyers due to persistently high home prices. This limits the buying power of many potential homeowners, especially first-timers.

• Cautious buyer re-entry: The small dip in mortgage rates could bring some hesitant buyers off the sidelines. However, many buyers are still taking their time, and the overall effect on buyer activity is expected to be modest heading into the fall. 

Key market predictions and insights

• Hottest regional markets: Several Northeast cities, including Buffalo, Providence, and Hartford, are projected to be among the hottest housing markets in the nation for 2025. This is due to their relative affordability and demand that continues to outpace local supply.

• Impact on new construction: Higher interest rates throughout 2025 are still impacting new construction, which is a major factor limiting new housing supply. Single-family building permits have decreased significantly year-over-year.

• Subdued sales, modest growth: Most market experts anticipate a gradual and challenging period for sales activity through 2025, but do not foresee a crash. National home price appreciation is expected to be modest, with estimates ranging from 1% to 4.3%, depending on the source.

• Future outlook: Market recovery is likely to be gradual and incremental. A return to pre-pandemic sales levels will depend heavily on a more significant decline in mortgage rates and further improvements in affordability.