Inventory and mortgage rates the biggest factors
of ConsumerAffairsThe National Association of Realtors has picked 10 top hot spots for the 2025 housing market based on economic, demographic and housing factors predicted to significantly impact local markets.
"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 NAR Chief Economist Lawrence 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.
- 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
Borrowing costs may stabilize
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.
The association 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."
Read the complete report: Housing Hot Spots for 2025: Top Markets Amid Stabilizing Rates.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-12-14 00:26:25
