These 10 states are America’s strongest housing markets

The U.S. housing market is in historic turmoil. Years of rock bottom interest rates, then the pandemic, and now an unprecedented cycle of tightening by the Federal Reserve that is likely not over yet, have left buyers and sellers in difficult spot.

Prices have begun to level off or decline in many areas in response to the higher mortgage rates. But according to the National Association of Realtors, homes are still difficult to find and even harder to afford. Some states are handling all this upheaval better than others, and companies of all kinds are watching this closely. With qualified workers in such short supply, business leaders are looking for places with healthy housing markets, where prospective employees can make smart purchases and enjoy a happy home.

CNBC’s annual competitiveness study, America’s Top States for Business, is watching too, measuring the housing market in many of the same ways that companies do.

Under our 2023 methodology, housing is a metric in the Economy category, one of the most important in our ten categories of competitiveness. To determine which states have the healthiest housing markets, we consider multiple factors including price appreciation, housing starts, foreclosure rates, and affordability. This year we included as a metric NAR’s Affordability Distribution Score, which looks at the affordability of homes for sale across all income levels, as of the end of last year. A score of 1 or higher generally suggests a housing market that is affordable, while the lower a score falls below 1, it is an indicator of a less affordable market without enough listings in local buyers’ range.

These 10 states are positioned to give you the best bang for your housing buck.

Here in the Heart of Dixie, prices are rising by double digits, according to the Federal Housing Finance Agency, but housing is still relatively affordable. Foreclosure activity in Alabama is still low, according to Attom Data Solutions, though a concerning percentage of mortgages are at risk of default.

2023 Economy Rank: No. 21 (Top States grade: C)

Appreciation: 10.25%

Affordability score (0 to 2, with 2 being most affordable): 0.74

Starts per 1,000 population: 3.8

Foreclosure rate: 1 in 5,934 homes

Underwater mortgages: 3.8%

The Badger State is also seeing healthy price appreciation and relatively low foreclosure activity. According to real estate marketing firm Redfin, the number of homes sold in Wisconsin fell by 20.9% in May, more than the national average of 15.8% But that is likely to help already strong affordability.

2023 Economy Rank: No. 20 (Top States grade: C)

Appreciation: 10.03%

Affordability score: 0.76

Starts per 1,000 population: 3.6

Foreclosure rate: 1 in 8,769 homes

Underwater mortgages: 4.2%