NAR Predicts Hottest Housing Markets For 2025 – Is Your City On The List?

The National Association of Realtors (NAR) recently released its annual report identifying the top 10 housing market hot spots for 2025.

The "Housing Hot Spots for 2025: Top Markets Amid Stabilizing Rates" is based on economic, demographic and housing market factors.

"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," NAR Chief Economist Lawrence Yun said.

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The top 10 markets, in alphabetical order, are:

• 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

These areas demonstrate strong financing environments with lower homeowner turnover or more attractive mortgage rates. Most of these markets outperform national benchmarks in at least six of NAR's 10 criteria.

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NAR anticipates a more stable housing market in 2025. The Federal Reserve is expected to continue gradually easing monetary policy, although concerns regarding federal deficits and rising public debt may temper the extent of rate cuts.

Despite these factors, borrowing costs are projected to stabilize, offering some relief to prospective homebuyers. NAR forecasts that mortgage rates will stabilize by nearly 6%, likely establishing a new normal. The rate is expected to attract more buyers back to the market, leading to an estimated 4.5 million existing home sales in 2025.

Home prices are also expected to continue upward, albeit slower than in previous years. NAR predicts a modest price increase of around 2%, reaching a median existing home price of $410,700.

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While the national housing shortage persists, inventory levels are gradually improving and are poised to increase even more in 2025. This improvement is anticipated to result from increased new construction activity and a rise in the number of homeowners listing their properties, driven by stabilizing mortgage rates and improving market conditions. NAR expects housing starts to reach 1.45 million units in the next couple of years, nearing the historical average annual level of 1.5 million.

"Homebuyers will have more success next year," Yun said. "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."

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