UPDATE: The Fall 2025 Kelley Real Estate Outlook has just been released, revealing alarming trends in Indiana’s housing market. The report highlights a significant surge in serious delinquencies on Federal Housing Administration (FHA) loans, escalating from 3.7% to 4.8% in just eight months. This urgent finding underscores the growing affordability crisis impacting home ownership across the state.
Published by the Indiana University Kelley School of Business and the Indiana Business Research Center, the report features critical analysis from Kelley professor Jun Zhu. Zhu’s research points to rising financial stress among borrowers, driven by inflation outpacing wage growth. This trend is not limited to housing; delinquency rates are climbing across various credit products, indicating a broader economic issue.
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Inflation has consistently outpaced wage growth, eroding families’ ability to build the emergency savings needed to weather unexpected financial shocks,”
Zhu explains. The report also notes that challenges such as skyrocketing insurance premiums and property tax increases particularly burden newer homeowners.
The report further emphasizes that today’s environment, while concerning, is not akin to the 2008 housing crisis. Enhanced foreclosure-prevention tools and a robust FHA insurance fund are helping to mitigate systemic risks.
In addition to FHA loan trends, the outlook features insights from Chris Hancock, CEO of the Builders Association of Greater Indianapolis (BAGI). Hancock reveals that while national new home construction is slowing, Central Indiana is seeing resilience. In June 2025, the region experienced a 6% year-over-year increase in single-family building permits, contrasting sharply with national trends.
However, Hancock warns of ongoing challenges such as supply chain delays, rising land development costs, and labor shortages. He states, “
Despite stabilized home prices in 2025, affordability remains the most pressing concern for both buyers and builders.
” The report stresses the need for collaboration among builders, policymakers, and community leaders to ensure Central Indiana remains an accessible and dynamic housing market.
The Kelley Real Estate Outlook aims to bridge the gap between academic research and practical industry insights, offering valuable data-driven resources like the Power Grid—a tool designed to consolidate essential market metrics for easier access.
As the housing market continues to evolve, stakeholders are urged to act promptly to address these challenges and protect homeownership opportunities in Indiana. The urgency of the findings in this report makes it clear: the time to understand and respond to the changing landscape of housing affordability is NOW.
