South dominates with four out of ten housing hot spots for 2025

In Washington, on December 12, 2024, the National Association of Realtors (NAR) revealed ten housing hot spots for the year 2025 based on a range of economic and demographic criteria expected to influence local markets. The South region leads the list with four markets, while three are found in the Midwest. These predictions come alongside expectations that mortgage rates will settle around 6% in 2025, providing a more favorable environment for buyers. NAR forecasted approximately 4.5 million existing home sales alongside a median existing-home price of $410,700, indicating a slow yet steady increase in home prices by about 2%. Crucially, NAR emphasized that adequate inventory at affordable prices, opportunities for low mortgage rates, increased job growth, and the influx of residents into certain metro areas are vital contributors to the anticipated real estate dynamics. These factors have been carefully assessed in the methodology that determined the top housing markets. For instance, the selected areas have shown improvement in metrics including job growth and the share of new homeowners, enhancing prospects for homebuyers. As the federal reserves are gradually easing monetary policies, the NAR expects more potential buyers to return to the market, adding to the transaction volume in the coming year. Moreover, the ongoing housing shortage presents challenges, but NAR observes an improvement in inventory levels ahead of 2025 based on an increase in new construction and homeowners being encouraged to sell due to stable mortgage rates and improving overall market conditions. As a result, housing starts are projected to reach 1.45 million units, approaching the historical average, which has been about 1.5 million units annually. Consequently, these projections signal a pragmatic recovery in the housing market, and NAR spokesperson Yun asserts that the worst of the affordability challenges is likely behind, with supportive factors such as inventory increases, stable rates, and income growth thus fostering more opportunities for prospective homebuyers to secure homes. The report also examines the methodology used to establish these hot spots. NAR analyzed a range of ten key factors including net migration rates, job growth, and price appreciation, each of which contributed to the identification of top markets. The conclusion from the report highlights that finding accessible housing options becomes critical as the real estate landscape evolves. In this context, as the market prepares for 2025, the indicators suggest a landscape becoming more favorable for buyers, where the broader economic recovery is likely to play a central role in shaping the real estate industry moving forward.