A major increase in home inventory should help buyers in the new year.
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The US housing market might be much more friendly to homebuyers in 2025.
Home sales should rise significantly as inventory grows and prices inch higher.
Here are 10 real-estate markets that could see a surge of activity next year.
Homebuyers should stock up on champagne — and not just for New Year's Eve.
Next year may present long-awaited opportunities for aspiring property owners to trade their apartments for homes, or for families to get the upgrades they've been pining for. There's a growing sense among real-estate analysts that an extended home sales contraction will snap in 2025 as housing inventory rises and mortgage rates fall.
"Homebuyers will have more success next year," said Lawrence Yun, the chief economist at the National Association of Realtors, in a statement about the firm's 2025 outlook. "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."
Housing market transactions will soar 7% to 12% in the year ahead to 4.5 million units before an even larger 10% to 15% jump in 2026, according to the NAR. New home sales are expected to climb 11% next year and 8% the year after.
Earlier this month, real-estate brokerage titan eXp Realty's CEO told Business Insider that sales could advance 10% in 2025, though Realtor.com called for a comparatively modest 1.5% gain.
National Association of Realtors
Home sales have tanked in the years after the post-pandemic boom, so those upbeat calls may sound like wishful thinking, especially coming from realtor trade associations and brokerages.
But a home sales boom seems plausible, based on what should be healthy supply and demand.
National Association of Realtors
Property supply has risen significantly in recent months from startlingly low levels, and housing starts are also in a long-term uptrend following a post-housing-bubble construction bust.
National Association of Realtors
That inventory uptick will keep property price growth in check at only 2% in each of the next two years, the NAR predicted, which would translate to a median existing-home price of $410,700. And buyers may also move off the sidelines as mortgage rates drift toward 6% from around 7%, the firm added.
Freddie Mac
"If rates stabilize around 6%, about 6.2 million households can once again be able to afford median-priced homes, compared to the current constraints with rates near 7%," the NAR noted.
Slower home-price growth and lower mortgage rates will go a long way toward easing the affordability crisis that has plagued the US since the pandemic. Just over a year ago, buyers suffered through the least affordable quarter since 1985. That may soon be a distant memory.
National Association of Realtors
10 hot real-estate markets
Home sales should surge across the US next year, especially in a healthy economy with solid job gains. However, researchers at the NAR expect certain cities to be far busier than others.
Buyers will flock to 10 top housing markets in 2025 due to a combination of rising home supply, manageable mortgage rates, and healthy local economies, the firm said. Healthy demand should underpin further home-price appreciation for owners in those metropolitan areas.
These soon-to-be-hot markets share several similarities, including strong property price growth since the pandemic, a sizable supply of starter homes, positive net migration, and an outsized share of out-of-state movers who are buying homes. Other factors were a market's job growth, mortgage rates, how long most homeowners had been there, and the share of millennial renters who could buy. The NAR outlined its full methodology for this exercise in a press release.
Below are the 10 real-estate markets that the NAR is bullish on next year, along with select economic and demographic considerations.
Along with each metro area is its home price growth in the last five years, starter homes as a share of total inventory, the share of homeowners who've been in place for more than 16 years and therefore may be ready to sell, net migration ratio, the share of out-of-state movers purchasing homes, job growth since late 2019, and commentary from the NAR.
1. Boston, MassachusettsBoston, Massachusetts skyline at dusk.
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Price appreciation history: 51.5%
Starter homes as share of inventory: 41.1%
Share of long-term homeowners: 10.2%
Net migration to population ratio: 0.1
Share of out-of-state purchasers: 18.8%
Job growth history: -0.2%
Commentary: "Boston's housing market is expected to see significant benefits from stabilizing mortgage rates. With fewer locked-in homeowners, the impact of the 'lock-in effect' may lessen in the coming year as rates stabilize near 6%, encouraging more homeowners to sell and easing inventory constraints in this supply-tight market. Additionally, Boston's mortgage rates have been relatively lower than the national average, which provides a competitive edge in today's challenging financing environment. A lower rate could help mitigate some of the affordability pressures. Surprisingly, Boston has also a larger proportion of starter-homes, with about 41% of the owner-occupied units valued below $550,000."
2. Charlotte, North Carolina
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Price appreciation history: 72.8%
Starter homes as share of inventory: 72.8%
Share of long-term homeowners: 46.9%
Net migration to population ratio: 1.4
Share of out-of-state purchasers: 23.5%
Job growth history: 10.1%
Commentary: "With an impressive 10% job growth over the last five years and strong migration gains, Charlotte's economy and housing market are poised for continued growth. More than 11% of the households are set to reach the age of 35 to 40 within the next five years, ensuring sustained demand for housing. Prospective buyers in Charlotte also benefit from a wider range of affordable options, as 43% of homes fall within the starter-home category (priced less than $324,000), making the market particularly appealing to first-time buyers and young families."
3. Grand Rapids, Michigan
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Price appreciation history: 64.4%
Starter homes as share of inventory: 39.6%
Share of long-term homeowners: 50.7%
Net migration to population ratio: 0.2
Share of out-of-state purchasers: 38.7%
Job growth history: 3.1%
Commentary: "Grand Rapids offers a unique combination of affordability and promising long-term prospects. With 36% of Millennial renters able to afford homeownership and 12% of households entering prime homebuying age within the next five years, the demand for housing will remain strong. A smaller proportion of originations with rates below 6%, compared to the national level, suggests a reduced 'lock-in effect,' which could lead to more inventory in this area. Additionally, the availability of starter-homes allows newcomers to purchase a home and establish roots, making Grand Rapids a standout market for 2025."
4. Greenville, South Carolina
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Price appreciation history: 68.8%
Starter homes as share of inventory: 42.2%
Share of long-term homeowners: 49.7%
Net migration to population ratio: 1.7
Share of out-of-state purchasers: 43%
Job growth history: 8%
Commentary: "Greenville stands out as the area that checks off the most criteria on NAR's top 10 list. This area particularly benefits from a strong net migration rate and affordability. The metro's average mortgage rate of 6.9% in 2023 is well below the national average, providing additional relief for buyers. With 42% of homes categorized as starter homes and 43% of movers purchasing homes, Greenville offers accessibility and stability for families and young professionals alike."
5. Hartford, Connecticut
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Price appreciation history: 62.8%
Starter homes as share of inventory: 38.7%
Share of long-term homeowners: 58.1%
Net migration to population ratio: 0.3
Share of out-of-state purchasers: 45%
Job growth history: 0.2%
Commentary: "Hartford offers a favorable financing environment, with an average mortgage rate of 6.5% in 2023 — one of the lowest among the top markets — enhancing affordability for buyers. Additionally, Hartford holds the highest proportion of homeowners surpassing the area's average tenure of 17 years, indicating a potential increase in local inventory, which could help alleviate supply constraints."
6. Indianapolis, Indiana
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Price appreciation history: 60%
Starter homes as share of inventory: 41.7%
Share of long-term homeowners: 48.5%
Net migration to population ratio: 0.5
Share of out-of-state purchasers: 21.7%
Job growth history: 9.3%
Commentary: "Indianapolis earned a spot on the list due its strong job growth and housing affordability, which continue to attract new residents and foster a stable demand for housing. Nearly 42% of the housing stock is priced below $236,000, making the market especially appealing to first-time buyers and young families. With fewer 'locked-in' homeowners than the national level, this area is likely to see more available inventory as mortgage rates stabilize around 6% next year."
7. Kansas City, Missouri/Kansas
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Price appreciation history: 59.9%
Starter homes as share of inventory: 41%
Share of long-term homeowners: 50%
Net migration to population ratio: 0.3
Share of out-of-state purchasers: 25%
Job growth history: 4.8%
Commentary: "Kansas City is one of the few areas with both a lower average mortgage rate and smaller share of locked-in homeowners, creating favorable conditions for financing and increased inventory. This area is also one of the most affordable markets for Millennial renters, with one in three of them able to afford homeownership. This affordability, combined with its competitive financing environments, makes Kansas City a key player among top-performing housing markets in the coming year."
8. Knoxville, Tennessee
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Price appreciation history: 90.9%
Starter homes as share of inventory: 42%
Share of long-term homeowners: 52.9%
Net migration to population ratio: 1.6
Share of out-of-state purchasers: 48.9%
Job growth history: 8.8%
Commentary: “Knoxville made up the top 10 list due to its strong migration gains and the appeal it holds for new residents seeking long-term stability as nearly 50% of movers in Knoxville chose to purchase a home. The impact of the ‘lock-in effect’ is expected to be less pronounced here, as fewer borrowers hold mortgages with rates below 6%. At the same time, homeowners in Knoxville have built substantial wealth, with home prices now nearly double their pre-pandemic levels. This combination of strong migration, high homeownership among movers, and significant wealth gains makes Knoxville a market with strong potential in 2025.”
9. Phoenix, Arizona
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Price appreciation history: 72.3%
Starter homes as share of inventory: 39.3%
Share of long-term homeowners: 42.5%
Net migration to population ratio: 0.7
Share of out-of-state purchasers: 35.8%
Job growth history: 11.9%
Commentary: "Phoenix has become a key destination for residents migrating from California, driven by its comparatively lower cost of living and housing affordability. This migration is further supported by Phoenix's strong job growth, which has expanded by 12% in the last five years. This combination of demographic shifts and economic expansion has established Phoenix as a prosperous and dynamic market."
10. San Antonio, Texas
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Price appreciation history: 44.8%
Starter homes as share of inventory: 40.5%
Share of long-term homeowners: 48.5%
Net migration to population ratio: 1.3
Share of out-of-state purchasers: 39%
Job growth history: 10.7%
Commentary: "The Texas Triangle couldn't be left off this list. Borrowers in San Antonio were able to secure mortgage rates well below the national average in 2023, at 6.4%. This suggests that buyers in the area benefit from a combination of local market dynamics that lead lenders to assess lower risk in this area. Additionally, San Antonio has experienced one of the strongest rates of job creation since pre-pandemic levels, which continues to draw new residents to the area."