A Look at 2025 Market Forecasts
In December 2024, the National Association of Realtors® (NAR) released its report, “Housing Hot Spots for 2025: Top Markets Amid Stabilizing Rates,” identifying ten metropolitan areas poised for significant growth in the housing market. These markets were selected based on various economic, demographic, and housing factors expected to influence local markets in the coming year.
NAR’s Top 10 Housing Hot Spots for 2025
- 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
According to NAR Chief Economist Lawrence Yun, these markets share common factors such as available inventory at affordable price points, a higher likelihood of unlocking low mortgage rates, increased income growth among young adults, and positive net migration trends. NAR forecasts that mortgage rates will stabilize near 6% in 2025, which wilencouragingers to enter the market. The association projects approximately 4.5 million existing home sales in 2025, with home prices expected to increase by about 2%, reaching a median existing home price of $410,700. Inventory levels are also expected to improve due to new construction and more homeowners listing their properties, leading to housing starts reaching 1.45 million units in the next couple of years.
Contrasting NAR’s optimistic outlook, other analyses offer varied perspectives on the 2025 housing market. Zillow’s forecast identifies Buffalo, New York, as the hottest major housing market for 2025, followed by Indianapolis, Indiana, and Providence, Rhode Island. Zillow’s analysis emphasizes factors such as job growth per new home permitted and expected growth in owner-occupied households. Notably, Buffalo was highlighted for its high ratio of new jobs to new homes permitted, indicating potential demand pressures. Both analyses place Indianapolis and Kansas City in their top ten but otherwise show little agreement. That said, their criteria for what constitutes a hot market are somewhat different: NAR’s criteria for a “hot market” focus on affordability, net migration, job growth, and the likelihood of unlocking low mortgage rates, emphasizing markets where buyers have better financing opportunities. In contrast, Zillow prioritizes job growth relative to new housing supply and expected increases in owner-occupied households, favoring markets with strong demand pressures and limited new construction.
| 2025 Hottest Markets Rank | Metropolitan Area | Change in Rank from 2024 | Zillow Home Value Index (ZHVI) 2024 | ZHVI Year over Year Growth, 2024 | 2025 Home Value Growth Forecast | Jobs per New Home Permitted | Change in Inventory Versus 2018–2019 Averages |
| 1 | Buffalo, NY | 0 | $260,537 | 5.7 % | 2.8 % | 2.0 | -46.1 % |
| 2 | Indianapolis, IN | 2 | $275,639 | 3.6 % | 3.4 % | 0.5 | -16.1 % |
| 3 | Providence, RI | 2 | $484,019 | 6.7 % | 3.7 % | 1.3 | -62 % |
| 4 | Hartford, CT | 15 | $363,298 | 6.5 % | 4.2 % | 1.1 | -68.6 % |
| 5 | Philadelphia, PA | 6 | $362,744 | 4.6 % | 2.6 % | 1.5 | -46 % |
| 6 | St. Louis, MO | 9 | $250,141 | 4.2 % | 1.9 % | 1.3 | -43.8 % |
| 7 | Charlotte, NC | 0 | $377,450 | 1.6 % | 3.2 % | -0.5 | 17.5 % |
| 8 | Kansas City, MO | 10 | $299,118 | 3.8 % | 2.7 % | 0.2 | -36 % |
| 9 | Richmond, VA | 11 | $368,957 | 4.1 % | 2.9 % | -0.1 | -43.3 % |
| 10 | Salt Lake City, UT | 18 | $543,324 | 2.8 % | 2.3 % | 0.5 | -4.8 % |
Fannie Mae’s December 2024 Economic Outlook presents a more cautious view, predicting that average mortgage rates will decline modestly but remain above 6% in 2025. The organization anticipates that existing home sales will stay near 30-year lows, with national home price growth decelerating. Fannie Mae also highlights significant regional differences, expecting relatively strong housing activity in the Sun Belt due to robust construction and offerings targeting d Virginia first-time homebuyers, while more supply-constrained areas like the Northeast may experience less activity.
Realtor.com’s 2025 Housing Forecast identifies Colorado Springs, Colorado, as the top market, with a projected combined growth in existing home sales and prices of 39.8%. Other notable markets include Miami-Fort Lauderdale-West Palm Beach, Florida, anBeach-Norfolk-Newport News, Virginia-North Carolina. The forecast attributes these trends to factors such as new construction, younger populations, military and international connections, and relative affordability.
While opinions differ among these different authorities, there are some points on which most agree. The U.S. housing market is anticipated to experience modest growth, with home prices projected to increase by approximately 2% to 3.7%. Mortgage rates are expected to stabilize around 6%, potentially encouraging more homeowners to sell and increasing the inventory of homes for sale. However, the lock-in effect will remain a significant factor in the 2025 housing market. Affordability challenges will persist due to elevated home prices and interest rates. Regional variations are likely, with markets in the Sun Belt experiencing more robust activity due to new construction and relatively affordable options, while supply-constrained areas like the Northeast may see less activity. Overall, while some improvements are expected, the market may continue to face challenges related to affordability and inventory constraints.
Read more: Consequences of the LA wild fires on the real estate market
Franklin Carroll
Franklin Carroll is Kukun's VP of Modelling and Analytics; After finishing his studies at the University of Chicago, he worked at Fannie Mae where he helped build Collateral Underwriter, roll out the Value Verify initiative, and specialized in collateral related and credit related policy.
Published February 4, 2025
