Lily Katz of Redfin starts us off this week reporting that while U.S. home prices rose 3.2% year-over-year in February 2025, the Midwest led the surge, with Milwaukee’s median sale price spiking 20%—the highest increase among major metros—followed by Detroit and Cleveland. Despite declining homebuyer demand and a 6.2% drop in pending sales nationwide, tight inventory in Midwest cities is driving bidding wars, contrasting with Texas and Florida, where home prices fell due to abundant supply.
That said, Jesse Wade of the National Association of Home Builders (NAHB) reports that the market value of U.S. household real estate assets declined for the second consecutive quarter, dropping from $48.5 trillion to $48.1 trillion in Q4 2024 after peaking at $48.7 trillion earlier that year. Despite the recent dip, asset values remained 7% higher year-over-year. Household real estate liabilities, including mortgages and home equity loans, rose 0.8% over the quarter to $13.3 trillion, marking a 2.6% annual increase.
Source: NAHB (March 2025)
Dana Anderson, also of Redfin, reports that seven of February 2025’s ten most expensive U.S. home sales occurred in coastal Florida, where affluent buyers remain drawn to the region’s beachfront lifestyle and tax advantages despite rising insurance costs and natural disaster risks. The top sale was a $49.1 million estate in Manalapan, FL, followed closely by multimillion-dollar deals in Jupiter, Palm Beach, Southern California, and Manhattan.
Jesse Wade of NAHB reports that softwood lumber prices continue to drive building material cost increases, with prices rising 11.7% year-over-year and 3% month-over-month in February 2025—the fourth consecutive month of double-digit annual growth. According to the latest Producer Price Index data, overall input costs for new residential construction (excluding capital, labor, and imports) climbed 0.5% in February, while goods specifically rose 0.6%. Energy inputs saw a 2.6% monthly uptick but remain down 8.5% from a year ago.
As noted by Alex Harring of CNBC, there are headwinds, who reports that new tariffs could raise material costs for the average new U.S. home by up to $10,000. The proposed 25% duties on Canadian and Mexican imports and existing levies on Chinese goods threaten to significantly inflate the price of key construction materials like softwood lumber, gypsum, steel, and appliances. Though Trump paused some tariffs for a month, uncertainty continues to weigh on homebuilders, with the SPDR S&P Homebuilders ETF down over 22% since November.
Rocket buys Redfin
According to a Rocket Companies press release, the company has announced a $1.75 billion all-stock acquisition of Redfin, valuing shares at $12.50 each. The merger combines Rocket’s nationwide mortgage platform with Redfin’s tech-driven real estate brokerage and its 50 million monthly users, 1 million listings, and 2,200+ agents. Both companies aim to streamline the homebuying process by integrating search, financing, and servicing under one tech-powered platform, enhanced by AI and vast consumer data. Rocket expects over $200 million in synergies by 2027 and anticipates the deal will boost earnings by late 2026.
Glenn Kelman, CEO of Redfin, comments:
“Rocket and Redfin’s approaches to lending and brokerage service have always been two halves of one vision to make the whole home-buying process magical…We want a customer to be able to check her phone to find out what she can afford, see which homes are just right for her, schedule a tour with a local, expert Redfin agent, and get pre-qualified for a loan, all in a matter of minutes. Varun and I see how much better real estate could be when AI guides customers not just through that first step in their search, but all the way home, through the sale, the loan and then a lifetime of accumulating equity and wealth.”
Lance Lambert of Fast Company reports on the acquisition, stating it was a strategic buy to boost market share by integrating Redfin’s 50 million monthly users and agent network into Rocket’s mortgage platform. Rocket aims to capitalize on Redfin’s vast data, tech-driven brokerage, and high-traffic search platform to create a seamless, AI-powered real estate ecosystem. The deal is expected to deliver $200 million in synergies by 2027, significantly enhancing Rocket’s purchase mortgage growth. The move comes amid a housing downturn, with Redfin hit hard by layoffs and financial struggles, making it an opportune, though calculated, acquisition target for Rocket.
Dani Romero at Yahoo! Finance reports that Redfin’s stock surged 76% after the announcement, while Rocket’s shares dropped 10%. Rocket aims to streamline the fragmented homebuying process by integrating Redfin’s platform, which reported $1.04 billion in revenue in 2024, with its own $5.1 billion mortgage business. Rocket CEO Varun Krishna highlighted the inefficiencies of the current disconnected system and sees the acquisition as a way to simplify transactions and reduce costs. The deal comes amid a sluggish housing market with high mortgage rates and limited inventory.
Finally, Paul Sawers of TechCrunch highlights that Rocket Companies’ acquisition is not just about market share, but about unifying the fragmented homebuying journey under one digital umbrella. By merging Rocket’s mortgage, loan, and finance services with Redfin’s real estate search and agent network, the deal aims to create a seamless, vertically integrated experience—from home search to financing to closing. Despite Redfin’s recent stock struggles, Rocket is offering a 63% premium over Redfin’s prior month average, underscoring the long-term strategic value. Redfin CEO Glenn Kelman will stay on post-merger, signaling continuity as the companies blend tech-driven platforms to modernize the real estate process.
Climate risk
Kara Ng of Zillow reports that trillions of dollars in U.S. residential real estate are facing significant risk from climate-related hazards such as fire, flood, and extreme wind. Homes with major wind risk alone are valued at $17 trillion, fire risk homes at $9.1 trillion, and flood risk homes at $7 trillion. Los Angeles tops the list for highest-value fire-risk properties ($831 billion), while New York and Miami lead in flood and wind risk exposure.
Source: Zillow (March 2025)
Additionally, the analysis highlights how these climate risks pose long-term threats to household wealth, with at-risk home values equating to as much as 13.5 years of cumulative income in vulnerable metros like Los Angeles. Zillow’s research also shows homes with high climate risk increasingly struggle to sell or command lower prices, underscoring growing market sensitivity to environmental dangers.
Andrew Freedman of Axios reports that climate change could wipe out $1.47 trillion in U.S. real estate value, driven primarily by rising insurance premiums and shifting consumer demand away from high-risk regions. According to a new analysis by First Street, metro areas like Miami, Jacksonville, Tampa, New Orleans, and Sacramento are projected to see the steepest increases in insurance costs. The report also predicts a wave of climate-driven migration, with over 55 million Americans expected to relocate to safer regions by 2055. While the findings highlight severe risks to property values and population stability, they also suggest potential growth for climate-resilient areas in the North and East.
In a separate Zillow analysis, Kara Ng also reports that homes with extreme flood and fire risks face increasing market challenges. These properties are less likely to sell and more likely to sell at a discount. In June 2024, only 52% of high-flood-risk homes sold compared to 71% of low-risk homes, and flood-prone properties typically sold for 6% below the initial list price. High fire-risk homes also saw lower sales rates, though the impact was less severe. Despite high-risk areas often commanding higher list prices due to desirable locations, mounting concerns over insurance costs, financing hurdles, and natural disaster risks are making buyers more cautious, particularly in flood-prone regions like Florida, Texas, and Alabama.
Kate McGregor of House Beautiful reports that climate risk is becoming a key factor for homebuyers in 2025. Among the most at-risk cities, San Jose leads with 98.5% of new listings facing major air quality issues, largely due to smog and surrounding wildfire threats. Riverside, CA, follows with 70.5% of listings flagged for severe fire risk, exacerbated by rising temperatures and strong winds. New Orleans ranks high for flood risk, with 76.8% of listings vulnerable due to rising sea levels, underscoring how climate concerns are increasingly shaping real estate decisions.
Eliyahu Kamisher of NMN reports that California Insurance Commissioner Ricardo Lara is set to approve a 22% emergency rate hike for State Farm policyholders, citing the need to stabilize the state’s insurance market following severe wildfires in the Los Angeles area.
