Learn more about the housing market in Missouri

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Missouri Housing Market Overview 

You may think of Missouri when thinking of the Chiefs football team, Budweiser, or the Gateway Arch. But what should you think about when wanting to buy a house there? 

Buying a home anywhere right now is proving difficult for many potential homebuyers. Interest rates have spiked and rising median home prices alongside increasing mortgage rates have dissuaded many buyers from entering the market. Missouri proves no different. 

Missouri’s inventory rate is well below what is considered stable—as of May 2024, Missouri only had two months of inventory to sustain its growing population. While low inventory is common across the nation, it’s important to keep this fact in mind as you look at housing options. Your choices may be limited, and competition is likely to be high.  

Missouri Housing Market Trends 

To further understand the Missouri real estate market, it’s important to keep up with trends. Let’s look at some key ones in Missouri: 

Note: These statistics are based on Redfin’s monthly housing data from May 2024. 

Median Home Price 

The median home price in Missouri is $271,400 in May 2024. This marks a 6.1% increase year-over-year. This median home price is the highest rates have reached since mid-2021, though some areas have a lower sale price—for example, St. Louis has a median sold price of $212,000 according to Realtor.com. 

Number of Homes Sold in April 2024 

In April of 2024, there were 6,817 homes sold in Missouri. There were 9.2% more homes sold this time this year than last year, perhaps in part due to Missouri’s lower-than-average home prices.  

However, it is important to note that nationally speaking, sales tend to peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Missouri is 25 days. Redfin states that the United States average DOM is 32 days, which is notably higher than Missouri’s rate. Some things that can affect a home’s DOM is how the home is priced compared to other listings in the area, or more generally, what the market is like. If the days on market is shorter, it typically indicates a seller’s market—there are more buyers than affordable homes available in that particular area.  

New Supply Statistics 

The number of newly listed homes in May 2024 was 9,425 according to Redfin. Additionally, in 2021, there were about 3.46 new residential construction permits per 1,000 people in Missouri. These metrics combined with Missouri’s two months of housing supply indicate that there is a slight shortage of homes in the Missouri market. Buyers may have difficulty finding homes that are within their budget in this competitive market.  

Property Tax Rate 

Missouri’s average property tax rate is 1.01% according to Rocket Mortgage. This rate is relatively typical for the nation, as it ranks #30 for property tax rates in America. However, keep in mind that property tax rates vary widely by county as well as your home’s value, so be sure to research your area’s rate before you purchase a home. 

Foreclosure Rate in Q1 of 2024 

One in every 2,986 housing units in Missouri experienced a foreclosure filing in the first quarter of 2024, according to recent data from ATTOM. Missouri ranks 38th for homes foreclosed upon during that period.  

Hottest Local Markets in Missouri 

1. Ballwin

Ballwin, Missouri is an up-and-coming city within the St. Louis region. It is one of the hottest markets in the state—the median sale price has risen to $435,000, a 16% increase from this time last year. 

Redfin characterizes Ballwin’s market as one of the most competitive in the nation, based off data from the past three months. Homes sell about 4% above list price and can go pending anywhere from three to five days. The hottest homes in the area can sell for as much as 9% above list price.  

Although St. Louis generally is less competitive than the averages for the state, certain spots within the city, such as Ballwin, are extremely popular and can be an area to look into.  

2. Green Park

Another hot spot within St. Louis is Green Park. Green Park’s sale price has risen over 23% from May of last year, and the median price is at $324,000. Since Missouri’s average sale price hovers around $271,000, it’s clear that Green Park is some of the more expensive cities in the area. 

Sale price doesn’t seem like it will be decreasing anytime soon, seeing as Green Park’s average days on market is at a neck breaking pace of 6 days. Some of the hotter homes in this zip code can go pending within 4 days, increasing housing procurement difficulty for prospective buyers around the St. Louis area.  

3. Crestwood 

Another hot market within Missouri is Crestwood. Crestwood is another extremely competitive area where popular homes can sell for as much as 10% above list price and go pending within 4 days.  

Crestwood’s median sale price is $320,000 as of May 2024, up 5.9% from last year. This area has a lot of interest and not much supply, creating such a competitive market. There were only 19 homes sold last month, which is a decrease of 20 homes since last May.  

Economic Factors Impacting the Missouri Housing Market 

A holistic view of Missouri’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

Bankrate lists Missouri’s current interest rate as 6.88% for a 30-year fixed mortgage as of the writing of this article. In 2021, Missouri saw rates that were record lows, but they’ve sharply increased to their currently high levels.  

Although these rates seem high, they are below the national average which is currently 7.05% for a 30-year fixed mortgage.  

Inflation and Cost of Living 

Missouri had the sixth lowest cost of living in 2024’s first quarter. Some cities came in slightly higher than the state’s average cost of living index, with St. Louis, Columbia, and Kansas City all having higher rate. It’s important to note, however, that Missouri and all its cities rank below the United States’ cost of living index.  

Population Changes and Demographics 

A changing population can also have implications for the housing market. In Missouri, the employment-population ratio was 61.2%, 1.1 percentage points higher than the U.S. average. The unemployment rate was around 3.5%, which is lower than the national rate.  

Employment in Missouri bodes well for the viability and health of the housing market, since a more employed population usually means more of them can afford to buy a home. However, with rising inflation and mortgage rates, fewer Americans than ever can afford a home that’s below 30% of their monthly income. 

Missouri Housing Market Forecast 

As is the norm throughout the nation, Missouri is likely to continue to experience low levels of inventory, spiking already high home prices and favoring sellers for at least the next few months.  

However, if mortgage rates can fall slightly, the market could be reinvigorated with buyers who have been sitting on the sidelines waiting for rates to decrease. Decreased rates could also persuade homebuyers to finally put their home on the market—many have felt stuck in their current home for fear that their mortgage rate on a new home would outpace their old one.  

The Federal Reserve has noted that rate cuts are in store for later this year, but until then, the market will likely stay relatively the same.  

Likelihood of Missouri Housing Market Crash  

Low inventory levels in Missouri have contributed to much of the difficulty buyers are having with finding homes that are within their budget. Lagging construction from the pandemic as well as the 2008 housing crisis still have ramifications on Missouri’s market—Missouri Realtors Association President Andrea Sheridan noted that with the 2008 crash, many builders left the industry and new construction rates have been low ever since. 

However, despite low inventory, the Missouri housing market seems stable. The population in the state is growing about 6% per decade, which is slower than the national average at 10% but growth all the same. Those 18 and older is expected to grow around 25% by 2030, which could increase demand for homes and revive the currently slow new home business. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at Missouri’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Missouri Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Missouri’s current rental market, with key trends from Zillow:

Missouri Rental Market Key Trends 

• Median Rent: $1,303 

• Month-over-month Change: +$3 

• Year-over-year Change: +$8 

• Available Rentals: 7,530

Conclusion 

The housing market in the Midwest may not seem as exciting as the markets on the east coast or in California, but in this national market, competition is fierce everywhere. If you are looking to move to Missouri, be sure to do further research into the neighborhoods you like and see how much you can expect to spend on a home there. Pay attention to interest rates and mortgage rates—if you find that you can’t feasibly afford something in this kind of housing market, take a step back, save up some money, and build your credit.