The National Association of Realtors (NAR) has announced 10 top hot spots for the 2025 housing market based on economic, demographic and housing factors predicted to significantly impact local markets.
In “Housing Hot Spots for 2025: Top Markets Amid Stabilizing Rates,” NAR Chief Economist and SVP of Research Lawrence Yun reveals 10 top housing hot spots, provides a 2025 real estate and economic outlook and reviews the 2024 housing market.
“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,” said Yun.
The 10 Top Housing Hot Spots for 2025
In alphabetical order, the following 10 markets have been identified as the top performers for 2025 due to their strengths across several indicators. All areas 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:
- 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
In gauging the top housing spots for 2025, NAR analyzed how each area performed relative to the national level across the following 10 key economic, demographic and housing factors:
- Share of locked-in homeowners: Homeowners with low mortgage rates from previous years hesitate to sell and take on higher mortgage rates, creating a “lock-in effect” that reduces housing inventory and activity in the market. Areas with fewer locked-in homeowners are likely to see more properties listed, increasing inventory and offering more opportunities for buyers.
- Average mortgage rate: While mortgage rates differ by area, a lower mortgage rate enables more buyers to qualify for a mortgage, boosting housing demand. This can lead to increased home sales and market activity in the area, as lower rates reduce the financial burden of purchasing a home.
- Job growth: Job growth drives economic stability and income increases, which are key factors for home affordability.
- Share of millennial renters who can afford to buy a home: Areas where more Millennials can afford homes are likely to see increased demand, especially for entry-level and starter homes, boosting local activity.
- Net migration to population ratio: Areas experiencing a strong influx of people also see increased demand for housing, as new residents require accommodations. This usually boosts activity in the area while also making home prices increase faster if supply doesn’t keep pace with demand.
- Share of households reaching homebuying age in the next five years: According to NAR’s 2024 Profile of Home Buyers & Sellers, the typical first-time buyer is 38 years old. Areas with a larger share of households entering this age bracket can expect stronger long-term demand for homes, affecting new construction and market stability.
- Share of out-of-state movers purchasing a home: While an influx of newcomers generally stimulates economic activity and boosts the housing market, those who choose to buy can bring even greater long-term benefits for the area. Their decision to invest in homeownership suggests people are there to stay, fostering a more stable and prosperous local market over time.
- Share of homeowners surpassing the average length of tenure: Homeowners who have surpassed the average tenure (typically 16 years) are more likely to consider selling, increasing housing inventory. Areas with a larger share of these homeowners may see an uptick in listings, helping to ease supply constraints.
- Share of starter-owner occupied units: Starter homes, typically priced at 85% of the median-priced home, are critical for first-time buyers. Areas with more starter-home inventory provide greater accessibility for younger or lower-income buyers, driving demand and creating a more affordable housing market.
- Home price appreciation: Faster price appreciation reflects a strong local housing market with increased demand, generating wealth for homeowners, attracting investment, and providing resources for community developments.
2025 Outlook
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.
NAR 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.
While the national housing shortage remains, inventory levels are gradually improving and poised to increase further in 2025. This uptick is anticipated to result from a combination of new construction projects and homeowners deciding to list their properties, encouraged by stabilizing mortgage rates and improving market conditions. NAR expects this to lead to increased 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,” said Yun. “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.”
Click here for more on NAR’s 10 Top Housing Hot Spots for 2025.
