The South and Midwest led the way for the National Association of REALTORS®’ (NAR) forecasted “Housing Hotspots” in 2025, based on a number of different factors such as inventory, affordability and mortgage rates.
Among the hotspots listed in the South were Charlotte, North Carolina; Greenville, South Carolina; Knoxville, Tennessee; and San Antonio, Texas. This was the region with the most metros listed by NAR. Next in line was the Midwest, with three metros: Kansas City, Missouri; Grand Rapids, Michigan; and Indianapolis, Indiana.
Each of the top 10 markets offers an advantageous financing environment, consisting of either a lower portion of locked-in homeowners or a lower mortgage rate, according to NAR.
“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 Lawrence Yun, chief economist for NAR, in a statement.
According to Redfin, Charlotte already saw an increase in the number of homes sold in October 2024, a year-over-year increase from 864 homes sold in 2023 to 901 in 2024. The same applied for Kansas City, which saw a year-over-year increase from 557 to 581 in October 2024, per Redfin.
The NAR housing forecast for 2025 also predicts that mortgage rates will stabilize near 6% next year, which will likely establish a new baseline. At that rate, NAR expects to see many buyers reenter the market, with a forecast of 4.5 million existing-home sales in 2025. NAR also forecasts that home sales will continue on their upward trajectory in 2025, but at a slowed rate (2% is the predicted increase), to reach a median existing-home price of $410,700.
NAR also expects the inventory issue to be alleviated somewhat next year, with falling mortgage rates and improved market conditions both catalysts for increased listing activity, coupled with new construction. The existing-homes listings may even encourage new construction—in fact, NAR expects it to.
Their prediction is 1.45 million housing starts in the next couple of years, falling just shy of the 1.5 million average annual level seen historically.
“Homebuyers 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.”
