One of the first factors home buyers must consider when purchasing a home is location. Housing prices and market demand vary significantly by geographic area, so each market has unique challenges.
Buyers typically get more for their buck in markets with lower demand, but that may mean they need to look in less populous areas.
Young buyers especially may find it challenging to close on a home in cities with limited housing supply and high competition.
Major cities generally have consistently strong demand due to limited inventory and the appeal to working professionals, but even the most in-demand housing markets ebb and flow in popularity.
The National Association of Realtors (NAR) just predicted which housing markets to watch in 2025 and notes the areas with the most up-and-coming opportunities are shifting.
Buyers hoping for a deal in the current high-interest rate market may want to consider new locations to get their dream home.
A young family in their new home. Mortgage rates and housing inventory are both expected to improve next year, making the market more advantageous for buyers.
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A new region in the US has the most up-and-coming housing markets
The NAR anticipates mortgage rates easing to 6% by the end of next year, which aligns with most forecasts. Though this is a welcome change, inflated rates may still make it challenging for buyers to find a home within their budget.
The median house price is expected to increase slightly to $410,700 in 2025, and housing inventory is expected to rise due to increased housing construction and more sellers entering the market.
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However, regional housing-market performance will vary by location. The regions with the most promise for 2025 include metro areas in North Carolina, South Carolina, Texas, Michigan, Indiana, Arizona, and Kansas.
Boston, Mass., and Hartford, Conn. areas made the list, too, but there are many more options outside the Northeast.
These top housing markets will have more affordable housing prices, a higher likelihood of lower mortgage rates offered, coupled with job opportunities and growing incomes for young adults. These issues will combine to bolster migration to these areas.
Zillow and PwC also anticipate the American Southeast as one of the hottest burgeoning housing markets and predict buyers will flock there to take advantage of good deals in a challenging market.
2025 will be more favorable for home buyers
Easing mortgage rates and increasing housing supply will likely improve home buyer confidence and get the market moving. Though the rates are likely to drop overall, they will be unpredictable, leading to some short-term volatility but long-term reductions.
Experts predict that more beneficial housing market conditions — even if only a marginal improvement — will release pent-up buyer demand.
Related: Dave Ramsey has a warning for Americans buying a home now
Lawrence Yun, Chief Economist at the NAR, expects 2025 to offer more opportunities for buyers.
”Home buyers will have more success next year,” he 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.”
Americans waiting to act but deterred by high mortgage rates and competition may find some relief in 2025.
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