Learn more about the housing market in Montana

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.  

Montana Housing Market Overview

As one of the largest states by area in the United States, Montana is very geographically diverse, with both mountain ranges and grasslands. According to data from IBISWorld, some of the sectors that contributed the most to the state’s 2023 GDP were Healthcare and Social Assistance, Retain Trade, and Professional, Scientific, and Technical Services. However, the highest contributor to the state GDP last year was Real Estate, Rental, and Leasing. For this reason, let’s look further into the notable housing market in the state. 

At the beginning of the year, experts predicted that particular trends that the housing market in Montana experienced in 2023 would continue into 2024. For instance, they predicted that rising median home prices would continue into the year. They also predicted that historically high mortgage rates in Montana at the end of 2023 would settle and stabilize. Both of these predictions seem to have come true as of April 2024.  

In fact, historically high interest rates have seen a significant decrease across the country. The national average 30-year fixed mortgage rate in late 2023 approached 8%, but settled in April 2024 to just below 7%. A similar trend can be seen in the Montana housing market, reflecting easing inflation that is bound to benefit a growing demographic of prospective homeowners across the country.   

Montana Market Trends 

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

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

Median Home Price 

The median price of a home in Montana as of April 2024 was $609,900 according to Redfin’s monthly housing market data. This is an increase of 4.4% from the previous year in April 2023. In Helena, the capital of Montana, the median prices were slightly lower at $445,531, according to Rocket Homes. This was an increase of 2.6% from the previous year. Appreciation is not consistent in every major city in Montana, and it is important to remember that statewide trends are aggregates of an array of housing markets within a state. 

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 median DOM in Montana in April 2024 was 57 days, according to the Federal Reserve Bank of St. Louis. This is down from 68 the previous year. This means that, on average, listings spend nearly two months on the market before being purchased. This also indicates that the market has become more competitive since this time last year. As expected, average DOM generally drops in the summer, when more people are buying homes and listings are more competitive. 

New Supply Statistics 

In April 2024, there were about 6.59 new residential construction permits per 1,000 people in Montana. This statistic, which points to the rate of new construction projects, is slightly above the national average. Increased housing supply is predicted to ease housing prices and increase affordability in many markets across the U.S. in 2024.

Property Tax Rate

According to Rocket Mortgage, the average property tax rate in Montana is 0.74%. This average is the 18th lowest in the country, with an average annual property tax of around $1,634.00. However, it is important to keep in mind that this statistic reflects the average of a lot of data in a populous state with significant geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.

Foreclosure Rate in Q1 of 2024

In the first quarter of 2024, 1 in every 7,187 housing units in Montana experienced a foreclosure filing, according to recent data from ATTOM. This is one of the lowest foreclosure rates in the country, ranked 49th nationwide.

Hottest Local Markets in Montana

1. Billings

By a considerable margin, Billings is the most populous city in Montana. Located southeast of the state’s capital city, Billings has a different housing market. According to Zillow, the median sale price for a home in Billings in April 2024 was $414,089. Its median DOM is 11 meaning that its housing market is considerably more competitive when considered against the state as a whole. Some of the most popular neighborhoods in Billings are Billings Heights, West Central Billings, and North Central Billings.

1. Helena

Located in the western side of the state, Helena is the capital of Montana. According to Zillow, its median housing price was much lower than the statewide median at $443,000. This is an increase of 5.3% from the previous year, an indicator of a steadily appreciating market across the state. The most popular neighborhood in Helena is Downtown Helena

1. Missoula

Behind Billings, Missoula is the most populous city in Montana, and is located northwest of the capital city Helena. Its median home price in April 2024 was $548,217, according to Zillow. This is a 5.3% increase from the previous year. Like many other cities in Montana—and around the country—median prices began to spike in the summer of 2020, and prices are steadily continuing to appreciate. Some of the most popular neighborhoods in Missoula are Franklin to the Fort, John Mullan, and Moose Can Gully. 

Economic Factors Impacting the Montana Housing Market

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

Mortgage Rates

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. As previously mentioned, national averages have dipped from last fall’s record highs, and Montana is no different. According to Zillow, the housing market in Montana is seeing average interest rates of around 6.51%. This accurately reflects predictions that high interest rates in the later months of 2023 would decrease and settle but stay above 6%.

Inflation and Cost of Living

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Montana. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.

Population Changes and Demographics

A changing population can also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Montana is 3.1%, making it the sixteenth lowest rate in the country. This low rate suggests a thriving and healthy jobs economy that is bound to be attractive to prospective homeowners in the state. 

Montana Housing Market Forecast 2024

As previously mentioned, experts considered the appreciating housing market Montana faced in 2023 and predicted that prices would continue to rise throughout the year. This has proven true over the course of the year, though steadying interest rates and a hope for increased supply in the housing market signified by an increase in sales may indicate a slowing growth in prices.

Likelihood of Montana Housing Market 

Though the way prices in the Montana housing market have continued to surge may seem concerning, experts maintain that a crash is very unlikely. There are many reasons for this, including a very healthy economy signified by a low unemployment rate, interest rates that have significantly settled from last year, and a growing number of people who are moving to the state. The market seems poised to continue appreciating, but it is unlikely to reach any significant or concerning threshold in the near future.

Forecast for the U.S. Housing Market

Now that we’ve looked at Montana’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’ 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.

Montana 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 Montana’s current rental market. Below are just a few of the current trends for Montana’s rental market based on data pulled from Zillow:

Montana Rental Market Key Trends

• Median rent: $1,800 

• Month-over-month rent charge: +$5 

• Year-over-year rent charge: -$50 

• Available rentals: 1,404

Conclusion

Though it is one of the least populous states in the country, Montana is very large and therefore has different areas whose housing markets are being informed by different factors and variables. However, as a whole, the 2024 housing market in Montana sees conditions that indicate a thriving and healthy housing market that buyers and sellers alike should watch closely. Experts and analysts will continue to monitor this market, as well as nationwide factors like interest rates and new construction.