The Portland metro area housing market continues to show an impressive level of resilience, even as we’ve spent the last three years navigating a higher mortgage interest rate environment. For most of the last decade, buyers could rely on historically low mortgage rates to offset rising prices. That’s not the case anymore — and yet, the market hasn’t collapsed. Instead, it’s adapted.
Mortgage rates have recently been hovering in the mid-6% range. Freddie Mac reported the 30-year fixed mortgage rate at 6.6% in September 2025, down from the high-7% range we saw in late 2023. This downward movement is positive, but it hasn’t been enough to fully restore affordability to the levels we experienced before rates spiked.
As the chart below shows, Portland’s Affordability Index has averaged 104.9 over the last decade. From 2015 through 2021, the market benefited from an average index of 115, meaning a median-income household could more than afford a median-priced home. From 2022 through 2025, that number dropped to 87.7, reflecting the sharp increase in financing costs and home prices relative to income.
While mortgage rates have eased from their peaks, pending sales have not returned to their pre-rate shock levels. The reality is that affordability is the oxygen of housing demand. When affordability declines, fewer buyers can act — even if they’d like to.
This trend has been evident since mid-2022: even as rates fluctuated and inventory remained constrained, buyer activity never fully rebounded to what we saw in 2019 through early 2021. Simply put, people can’t buy what they can’t afford.
It’s tempting to think that demand will “come back” simply because rates fall a little or because people need housing. But markets move on affordability, not just interest rates in isolation. A family earning the median income in the Portland Metro area could afford 93% of a median mortgage payment in September 2025 — better than a year ago, but still below the level where the market historically operates at full capacity.
Affordability is the foundation upon which transaction volume, price stability, and market velocity are built. Without it, even resilient markets like Portland experience drag.
The Portland market’s resilience is worth recognizing. Prices have held, inventory has remained manageable, and there continues to be a consistent flow of transactions. But resilience isn’t the same as growth. Until affordability improves meaningfully — through lower rates, higher incomes, or some combination of both — we should expect steady, predictable, but subdued levels of activity compared to the last decade’s boom years.
The Portland housing market has adjusted to higher rates, but it hasn’t fully recovered. Affordability remains the most important metric to watch. Mortgage rates are trending in a more favorable direction, but as long as the cost of ownership outpaces what median incomes can support, buyer activity will remain constrained.
If you're thinking about buying or selling in this environment, understanding affordability trends is essential to making a smart move — not just chasing interest rate headlines.
By David Caldwell, Principal Broker, Hillshire Realty Group at Real Broker
