The three most important things in real estate: location, location, location. The U.S. housing market is in a strange place right now.
Mortgage rates are nearly double what they were a year ago, reflecting the Fed’s actions to rein in inflation. But they have also been volatile, including sharp weekly declines.
While the inventory of homes for sale is starting to build up and housing markets across the country, including some of the biggest in the states below, are starting to cool, prices remain at record highs amid reports of bidding wars in some places.
Where is everything going? Realtor.com recently revised its 2022 forecast and now calls for a 6.7% drop in sales this year. Forecasters had called for a 6.6% increase. But even if the new forecast holds, it would still be the second-biggest sales year since 2007, behind last year.
As always, some states will fare better than others. As companies factor local housing markets into their site selection decisions, CNBC’s Best States for Business America study measures the health of each state’s housing market as part of a broader economic category that, according to this year’s methodology, 13% of the state’s overall score. Housing metrics take into account year-over-year price increases, new construction each year, and foreclosures and bankruptcies in the first quarter.
Looking for a safe place to weather a potential housing storm? These ten states are the most stable.
10. South Dakota
Deadwood, South Dakota
John Elk | Photo Gallery | Getty Images
Mount Rushmore State has a solid economy and prices are rising steadily. Foreclosure activity is very low, but rising underwater mortgage levels could signal some cracks below the surface.
2022 Economic Ranking: No. 12 (Top State: B-)
Starting point per 1,000 people: 8.8
Foreclosure rate: 1 in 17,724 housing units
Underwater mortgages: 4.8%
9. South Carolina
Contractors work on the roof of a home under construction in the Stillpointe subdivision of Sumter, South Carolina, Tuesday, July 6, 2021.
Micah Green | Bloomberg | Getty Images
Inventories are still historically tight, bidding wars are still common in many South Carolina markets, and prices are still rising steadily. But new construction is surging and pressure on existing loans is contained.
2022 Economic Ranking: No. 13 (tie) (top state: B-)
Starting number per 1,000 people: 9.5
Foreclosure rate: 1 in 1,081 housing units
Underwater mortgages: 3.4%
A worker builds a new home at a residential development in Phoenix, Arizona.
Justin Sullivan | Getty Images
Prices here have risen more than any other state. But new construction is also booming, helping to ease tight inventory in Arizona. Rising foreclosures are a potential cause for concern, but home equity is solid.
2022 Economic Ranking: No. 22 (tie) (top state: C-)
Starting number per 1,000 people: 9
Foreclosure rate: 1 in 1,861 housing units
Underwater mortgages: 1.4%
Traditional homes in Vermont.
Gerard Sion | Getty Images
The Green Mountain State continues to benefit from new residents seeking shelter from big cities. Home prices are rising at a healthy rate, while mortgages are exceeding healthy levels. However, new construction has not kept pace, and Vermont’s overall economy has been sluggish.
2022 Economic Ranking: 33rd (Top State: D+)
Starting number per 1,000 people: 3.2
Foreclosure rate: 1 in 13,930 housing units
Underwater mortgages: 1.1%
A house in Nashville, Tennessee.
Isabella Pino | Universal Pictures Group | Getty Images
Tennessee has the second-strongest overall economy in the nation, and its strong and stable housing market is a big reason why. House prices have soared along with economic output. New construction is healthy, although foreclosures and underwater mortgages are starting to spread.
2022 Economic Ranking: No. 2 (Top State: A+)
Starting number per 1,000 people: 8.2
Foreclosure rate: 1 in 2,797 housing units
Underwater mortgages: 2.9%
A “NEW HOME” sign near the CBH Homes Copper River Basin community in Nampa, Idaho, on October 19, 2021.
Kel Green | Bloomberg | Getty Images
The Idaho real estate market has been around for a while. Buying a home in the Gem State is not for the faint of heart. But new construction is slowly starting to ease pressure on inventories. Rising foreclosure rates are a potential warning sign if the economy slips into a recession.
2022 Economic Ranking: No. 5 (Top State: A)
Starting number per 1,000 people: 10.5
Foreclosure rate: 1 in 6,015 housing units
Underwater mortgages: 1.6%
A residential neighborhood in Austin, Texas, on Sunday, May 22, 2022.
Jordan Von der Haar | Bloomberg | Getty Images
Population growth in Texas is helping fuel the housing boom, but it’s not getting out of hand. New homes for these new residents are popping up quickly and home equity is good.
2022 Economic Ranking: No. 8 (Top State: A-)
Starting number per 1,000 people: 8.9
Foreclosure rate: 1 in 2,326 housing units
Underwater mortgage: 2.5%
Available signs for single-family homes in St. Cloud, Florida.
Jeff Greenberg | Universal Pictures Group | Getty Images
The Florida real estate market is almost all sunny. Prices are rising, but so are construction workers. Rising foreclosure rates can be a dark cloud in a state known for its boom-and-bust cycles.
2022 Economic Ranking: No. 4 (Top State: A)
Starting point per 1,000 people: 9.6
Foreclosure rate: 1 in 1,211 housing units
Underwater mortgages: 1.4%
A “For Sale” sign is posted outside a home in the Queen Anne neighborhood of Seattle, Washington, on May 14, 2021.
Karen Ducey | Reuters
Washington’s impressive economic growth has kept its housing market among the hottest in the nation for years, unrelated to predictions of a collapse. A shortage of new construction could keep prices high and raise ongoing concerns about market stability.
2022 Economic Ranking: No. 3 (Top State: A)
Starting point per 1,000 people: 7.3
Foreclosure rate: 1 in 4,965 housing units
Underwater mortgages: 1.2%
A worker uses a Volvo AB excavator to build a road during residential construction in Saratoga Springs, Utah.
George Frey | Bloomberg | Getty Images
No matter how you look at it, the real estate market in the hive state is buzzing. Prices are rising at the second-highest rate in the nation, but with the nation’s fastest pace of new construction, Utah is flooding with new inventory. In the nation’s top real estate markets, foreclosures are manageable and home equity is strong.
2022 Economic Ranking: No. 6 (Top State: A)
Starting number per 1,000 people: 12.2
Foreclosure rate: 1 in 2,063 housing units
Underwater mortgages: 1.4%
Data sources: CNBC America’s Best Business States Study, Federal Housing Finance Agency, U.S. Census Bureau, ATTOM Data Solutions.