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The 2025 US housing market is shaping up to be an interesting one, according to Realtor.com's latest forecast. While nationwide trends point towards a slight uptick in home sales and moderating price growth, the real story lies in specific regional markets, particularly in the South and West. This blog post dives into the key takeaways from the report, highlighting why these areas are predicted to outperform the rest of the country.

Sun Belt Dominance: The Top 10 Markets

Realtor.com's analysis of the 100 largest metropolitan areas reveals a striking concentration of top-performing housing markets in the Sun Belt. The top 10 spots are exclusively held by cities in the South and West, with Texas, Florida, and Virginia each boasting multiple entries. Think Colorado Springs, Miami, Virginia Beach, and several others. These markets aren't just randomly selected; they're projected to lead in both home sales and price growth in 2025.

What's Driving This Growth?

Several factors contribute to the projected success of these markets:

• Momentum: These areas have shown stronger recovery to pre-pandemic sales levels and are expected to maintain that upward trajectory.

• Inventory Boost: Improved housing inventory, often fueled by new construction, provides more options for buyers. While nationwide inventory is recovering, the South and West are leading the charge and closer to pre-pandemic levels. New construction is playing a significant role, with many of these markets seeing growth in single-family home permits.

• Demographics: These markets tend to attract younger families, often with military or international ties. This demographic profile influences the market in several ways, from increased mobility (military families) to access to government-backed loans (VA and FHA).

• Government-Backed Loans: The prevalence of VA and FHA loans in these areas creates opportunities for homeownership, especially for younger families, due to lower down payment requirements.

• Flexible Work: The rise of remote and hybrid work arrangements benefits these markets, particularly those offering a balance of affordability and proximity to larger job centers. While some markets have fewer remote job postings, they offer lower cost of living advantages over nearby metros with more flexible work opportunities.

• Relative Affordability: While affordability remains a concern nationwide, these markets generally offer a slightly lower cost of living compared to the national average, even if the income required to afford a home is similar or slightly higher than average.

A Closer Look at Inventory and New Construction

The inventory story is complex. While nationally, inventory is improving, it still lags behind pre-pandemic levels. However, the South and West are seeing a much stronger recovery. New construction is a key component, with single-family home permits on the rise in many top markets. Interestingly, despite increased construction, the share of new home listings in some top markets has actually decreased, suggesting a healthy balance with recovering existing-home sales.

The Human Element: Demographics and Connections

These top markets are magnets for younger families, with a higher proportion of residents under 35 and families with children. Military connections are also prominent, which impacts the market through increased relocation frequency and access to VA loans. Furthermore, international ties are strong in many of these areas, attracting international homebuyers.

Affordability: A Balancing Act

While these markets offer a lower cost of living, affordability remains a challenge. The share of income required to purchase a home is often similar to or slightly above the national average. However, the availability of government-backed loans and lower down payments helps to mitigate this issue, making homeownership more attainable for many.

The Bottom Line

The 2025 housing market presents a mixed bag. While national trends suggest modest growth, the real action is happening in specific regional markets, particularly in the South and West. These areas are benefiting from a confluence of factors, including improved inventory, favorable demographics, access to government-backed loans, and the rise of flexible work. While affordability remains a concern, the combination of these factors positions these markets for continued growth in 2025.

**Sources**

* Realtor.com 2025 National Housing Forecast: https://www.realtor.com/research/top-housing-markets-2025

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