America's best cities for homebuyers

Small midwestern cities dominated emerging housing markets for affordable homes in the first quarter of 2023, even as sales across the country remained significantly down in the face of staggering interest rates.

Cities and towns across Indiana, Illinois, Iowa, Kansas, and Nebraska were found to be the best in the country for buyers looking for affordable homes that are expected to appreciate in value, according to new data compiled by Realtor.com.

Though home sales across the country were down 22 percent in March compared to the same time last year, according to the Wall Street Journal, many midwestern cities saw their market grow while remaining affordable to local incomes. Topping the list was Lafayette, Indiana, where the median home price was $289,000 - roughly a third of the $424,000 national median.

Across the top 20 emerging markets, there wasn't a single city located on the west coast - where home prices are highest in the United States - while just four were located along the east coast.

It wasn't just Lafayette that had median housing prices below the national average - 18 out of the top 20 markets did.

The only cities that topped the median were Manchester, New Hampshire, in the 10th spot with a median of $550,000, and Knoxville, Tennessee, in the 20th spot with a median of $470,000.

The average population among the top 20 cities was below 400,000.

Realtor.com pulled data from 300 of the largest metro areas in the US, and factored in lifestyle metrics like real-estate taxes, commutes to work hubs, unemployment rates and average wages, along with the availability of business loans.

In addition to home sales being down the same time last year, the numbers of new listings have also declined by 20 percent. 

'We are continuing to see this shift in demand for less expensive markets, many of which are in Midwestern markets,' Realtor.com analyst Hannah Jones said. 'They didn't see the same kind of price growth that larger cities did during the [COVID-19] pandemic, so they maintained affordability.'

 'These are some of the only markets where locals and first-time buyers can afford to buy a home based on local salaries,' she said.

Data showed Lafayette, Indiana, was the best emerging housing market in the United States

1. Lafayette, Indiana 

The city of Lafayette, Indiana, was found to be the best emerging market in the country with a median home price of $289,000. It was the second quarter in a row the city led the rankings.

About 225,000 people live within the city's metro area, while Purdue University and a number of prominent manufacturing businesses call it home. Subaru, Caterpillar, and Wabash National Corp. are all based in the city.

'Homes in Lafayette are significantly more affordable, and it has a strong economy,' Jones said.

A three-bedroom home in Bloomington, Illinois, currently on the market for $389,900 

2. Bloomington, Illinois 

The second-best city was Bloomington, Illinois, where the median home listing price was $339,000. 

Bloomington's metro area had a population of about 191,067. State Farm Insurance is based there, as is the University of Illinois's primary campus.

Current listings in the city include a 2,010 square-foot three-bed, three-bath home for $255,000, a 2,688 square foot 3-bed on 2.74 Acres for $389,900, and a 5-bedroom 4,368 square-foot home built in 2023 for $549,900.

Elkhart, Indian, was third on the rankings with a median house price of $275,000

A four-bedroom house in Elkhart, Indiana, that sold for $220,000 in April

3. Elkhart, Indiana

With a population of about 53,923, Elkhart, Indiana, came was ranked third with a median home price of $275,000.

Known as the "band instrument capital of the world,' a prominent employer in the area is the instrument manufacturer Conn-Selmer.

Recent sales in the city include a four-bed two-bath 1,988 square-foot home that sold for $200,000 this month, a four-bed 2,134 square-foot home built in 1900 that just sold for $220,000, and three-bed 2,128 square-foot home that told for $198,000.

A three-bedroom house in Lebanon, Pennsylvania that sold for $320,000 in April

4. Lebanon, Pennsylvania

A small city just outside of the Pennsylvania state capital, Lebanon has a population of just 26,814 and a median home price of $372,000.

The city has a large number of manufacturing jobs, healthcare jobs, and while its proximity to Harrisburg makes it a convenient home for many who work in the capital city.

Home sales this month include a three-bed 1,640 square-foot home that sold for $259,000, a five-bed 2,804 square-foot house that sold for $550,000, and a 1,308 square-foot three-bed for $320,000.

Fort Wayne, Indiana has a large industry of manufacturing for defense contractors 

5. Fort Wayne, Indiana

With a metro population of 423,038, For Wayne is Indiana's second-most populous city. It ranked fifth in the country for emerging cities with a median home listing price of $339,000.

The city is a large hub for manufacturing jobs in the area, and has an especially large defense contracting presence with companies like Raytheon Technologies, the Harris Corporation, BAE Systems, and the prominent Fort Wayne Air National Guard Station employing thousands.

Some recent home sales in the city include a three-bedroom one-bathroom home for $137,000, a three-bedroom two-bathroom house for $375,000, and a four-bedroom 3,202 square-foot home for $360,000.

6. Topeka, Kansas

Just west of Kansas City, Topeka has a population of 232,670 and came in sixth in Realtor.com's rankings with a median home price of $249,000.

The capital of Kansas, the state is the largest employer in the city, while manufacturing companies like Frito-Lay and Goodyear Tire Company also employ many residents.

Current listings include a three-bedroom 1,148 square-foot home for $135,000, a $449,900 five-bedroom, and a 2,856 square-foot three-bedroom for $330,000.

A Sioux City, Iowa, three-bedroom that sold for $355,000 in April, above the city median

7. Sioux City, Iowa 

The four largest city in Iowa with a metro population of 149,940, Iowa City was seventh in the rankings for emerging cities with a median house price of $305,000.

The largest employers in the city are Tyson Meats, Seaboard Triumph Foods, the city school system, and health care groups.

Recent home sales include a three-bedroom home that went for $190,000, a three-bedroom that went for $225,000, and a 2,451 square-foot three-bedroom that sold for $355,000 this month.

8. Omaha, Nebraska

Nebraska's largest city with a metro population of 967,604, Omaha was Realtor.com's eight ranked emerging city with a median home price of $345,000.

The city's largest employer is the Offutt Air Force Base, CHI Health, the city public school system, and health centers like Methodist Health System, Nebraska Medical Center, and the University of Nebraska Medical Center.

Homes sold in Omaha this month include a 1,963 square-foot three-bedroom that sold for $275,000, and a four-bedroom 3,285 that sold for $386,000.

A five-bedroom home in Springfield, Illinois, that sold for $124,900 in April

9. Springfield, Illinois 

State capital of Illinois, Springfield has a population of 114,394. Realtor.com ranked it number nine for emerging cities with a median home price of $144,000.

The state of Illinois is the largest employer in the state, with Memorial Health System and Hospital Sisters Health System following behind, according to a 2021 city financial report.

Recent home sales include a five-bed, 2,156 square-foot home that sold for $124,900, a three bedroom that went for $63,000, and a three-bedroom 2,220 square-foot house that sold for $308,000.    

A three-bedroom in Manchester, New Hampshire, that sold for $476,000 in April

10. Manchester, New Hampshire

New Hampshire's most populous city with 422,937 people in the metro area, Manchester was ranked tenth in the country for emerging cities by Realtor.com with a median house price of $550,000.

Elliot Hospital is one of the city's largest employers, as if Catholic Medical Center, Southern New Hampshire University, Eversource Engery, TD Bank, and Citizen Bank, according to YourManchesterNH.com.

Home sales this month included a 2,124 square-foot three-bedroom that sold for $476,000, a five-bedroom home that sold for $599,995, and a 1,500 square-foot three-bedroom that sold for $400,000.