The National Association of Realtors (NAR) has unveiled its 10 Top Housing Hot Spots for 2025, which uses economic, demographic and housing factors to forecast where home sales will be strongest in the coming year.
In 2025, the South region leads with four of the 10 housing “hot spots,” followed by the Midwest with three.
What follows are the Top 10 Hot Spots in alphabetical order:
- Boston-Cambridge-Newton, Massachusetts-New Hampshire
- Charlotte-Concord-Gastonia, North Carolina-South Carolina
- Grand Rapids-Kentwood, Michigan
- Greenville-Anderson, South Carolina
- Hartford-East-Hartford-Middletown, Connecticut
- Indianapolis-Carmel-Anderson, Indiana
- Kansas City, Missouri-Kansas
- Knoxville, Tennessee
- Phoenix-Mesa-Chandler, Arizona
- San Antonio-New Braunfels, Texas
“Important factors common among the top performing markets in 2025 include available inventory at affordable price points, a better chance of unlocking low mortgage rates, higher income growth for young adults and net migration into specific metro areas,” says Lawrence Yun, chief economist for NAR, in a release.
All areas in the Top 10 offer a favorable financing environment – either with lower proportions of locked-in homeowners or lower mortgage rates. In addition, most of these markets outperform the national average in at least six of NAR’s 10 criteria.
NAR expects the Federal Reserve to maintain a gradual approach to easing monetary policy in 2025. While concerns about federal deficits and rising public debt may cap the extent of those rate cuts, borrowing costs are anticipated to stabilize overall, offering some relief to prospective buyers.
NAR forecasts that mortgage rates will stabilize near 6% in 2025, likely establishing a new normal. At this rate, more buyers are expected to come back to the market, boosting activity, and the association projects 4.5 million existing-home sales in 2025.
The association also predicts that home prices will continue to increase in 2025, but at a slower pace compared to previous years – with increases likely to be around 2% – reaching a $410,700 median existing-home price.
NAR also expects increased home construction, with housing starts reaching 1.45 million units in the next couple of years, just shy of the historical average annual level of 1.5 million units.
“Home buyers will have more success next year,” Yun says. “The worst of the affordability challenges are over as more inventory, stable mortgage rates and continued job and income growth pave the way for more Americans to achieve homeownership.”
Photo: Gustavo Zambelli
