A big bump in home sales could come for some places characterized by moderately affordable homes, abundant inventory, and a sizable base of younger families, according to the latest projections from Realtor.com.
For realty agents and mortgage pros who hang their licenses in Colorado Springs, Colo., Miami, and Virginia Beach, Va., business should be popping, with those markets projected to be the hottest next year – each projected to have a 20% or larger increase in sales.
Colorado Springs could see a 27% jump over 2024's totals; Miami, a 24% boost; and Virginia Beach, a 23% rise. These places' inventory is mainly bolstered by new construction, and many younger families in those markets have military and international connections.
Overall, home sales nationally are expected to rise – but just a tad – next year. That mirrors projections by Redfin. On the downside, it will be tough sledding for housing markets in 10 of the nation’s 100-largest metro areas, where Realtor.com anticipates fewer sales next year.
The worst will be Providence, R.I., where sales are projected to slide almost 15%. Sales could fall 10% in San Jose, Calif., and 8% in New Haven, Conn., Birmingham, Ala., and Madison, Wisc.
The top spots identified in the forecast also should see substantial price gains next year.
The listing service is calling for nearly a 13% increase is prices in Colorado Springs in 2025, for example, and jumps of 12% or more in places like Las Vegas; Boise, Id.; Orlando, Tampa, and Daytona Beach, Fla.; and Ogden, Utah.
“The top markets we’ve identified are poised for stronger sales and price gains in 2025,” said Danielle Hale, chief economist at Realtor.com. “With mortgage rates likely to ease only modestly next year, these markets – offering relatively lower-priced homes, more new and existing houses to choose from, and mortgage products designed to give buyers a leg up – could provide some would-be buyers a better chance at entering the market next year.”
The best 10 markets are exclusively in the South and West, with Texas, Florida, and Virginia having more than one. After the top three mentioned above, they are, in ranked order, El Paso, Tex.; Richmond, Va., Orlando, Fla.; McAllen, Tex.; Phoenix; Atlanta; and Greensboro, N.C.
These metros generally offer lower home prices than the national average, though incomes there tend to be lower as well. Consequently, affordability will continue to be a challenge. While the national average for income spent on housing is 29.2%, those in the top 10 will end up paying about 31.1% to own a house next year.
At the same time, however, seven spots have a more affordable cost of living compared to the average across the country, so ownership shouldn't be too much of a burden. With living costs 13% below the national average, McAllen, Tex., will be the most affordable place in the country in 2025.
Miami, meanwhile, is projected to be the least affordable. With costs of living 11.5% above average, ownership there will consume 42% on the typical income for the region.
Realtor.com research found many shoppers are using flexible work options to navigate affordability challenges. That’s a trend the site expects to continue.
Half of the top markets, including Richmond, Va. (11.8%), Atlanta (10.8%), Phoenix (10.6%), Colorado Springs, Colo. (8.9%), and Orlando, Fla. (8.8%) reported higher shares of remote or hybrid job postings in 2024 than the average across the top-100 metros (8.6%), according to work-from-home data.
When it comes to inventory, the overall market still trails the November 2017-2019 average by 20%. But the South and West are far closer to pre-pandemic levels than the Midwest and Northeast. Among the top-10 metros, eight have seen year-over-year growth in single-family home construction, with builders increasingly focusing on more affordable and smaller homes to meet demand.
New home construction is only part of the story, however, the report states. Despite increased construction, new home listings have declined as a share of the market in eight of the top 10 markets as more existing owners put their homes up for sale.
Another defining characteristic of the best places for housing next year is their diversity. Younger households are more common, with only Miami having an above-average share of residents over the age of 35. The top spots also have a higher share of families with children – almost 29% versus 26.5% nationally.
Connections to the military also play a key role, according to the research. More than one in seven households in the top markets are on active duty or are veterans – slightly more than the national average of one in eight. And they have strong international ties, too, with almost 18% of their residents being foreign born versus 13% in the 100 largest markets.
With the prevalence of younger households, military ties, and lower down payments, government-backed lending is certain to play a key role going forward, just as it has in the past, Realtor.com points out.
Because of high VA-loan usage, more than half of recent mortgages were government loans in Colorado Springs, Colo., El Paso, Texas, and Virginia Beach, Va., the site reports. Almost three in four mortgages were government loans in El Paso, with VA loans accounting for 29.3% and FHA loans gobbling up 41% of originations.
