- US home sales remained low in 2024 because of high mortgage rates and home prices.
- Southeastern cities such as Charlotte and Knoxville saw high demand despite affordability issues.
- Analysts predict home sales may rise in 2025, driven by lower mortgage rates.
Another tough year in the US housing market was anything but boring for those in popular cities.
Home sales were soft for a third straight year, the National Association of Realtors recently noted. Mortgage rates and home prices are down from peak levels, but affordability remains a major issue and has sidelined millions of would-be buyers, who are instead renting.
But sellers in hot markets still won big as buyers battled for scarce spots in coveted cities.
10 places movers flocked to in 2024
To determine this year's most popular US real-estate markets, Business Insider compiled and analyzed data from six sources about moving patterns, rents, rental-market competitiveness, search interest from homebuyers, and home price growth history and projections.
Though there were some mixed signals, there were also some clear conclusions about which regions, states, and cities drew the most interest from buyers and renters.
A brief look at migration data from Atlas Van Lines may yield more questions than answers. The moving firm found that the places with the most inbound movers relative to those leaving were Arkansas, Rhode Island, North Carolina, Idaho, and Washington, DC. Also on the list of states with inbound rates of at least 55% were Maine, Connecticut, Washington, Alaska, Alabama, and New Mexico, which essentially covers all four corners of the US.
But while that moving data gives a solid big-picture overview, it doesn't provide insight into which individual markets were most popular. That was instead determined by other measures of demand, like how much prices for homes and apartments rose, or how tough they were to land.
This process was more of an art than a science, but the 10 cities that best fit those criteria within states with substantial positive inflows of movers were all east of the Mississippi River. Even more notable is that the Southeast was home to eight of those 10 popular markets, which were spread across just three states: North Carolina, Kentucky, and Tennessee.
North Carolina was tied for second in the nation in mover inbound rate at 63%, due in part to four especially hot markets. Winston-Salem and nearby Greensboro saw their rents rise 6.7% and 5.3% this year, respectively, giving their rental-market competitiveness scores a big boost. Two other major cities in the Tar Heel State — Charlotte and Durham — saw rents decline but were among the 20 most searched markets by homebuyers.
Those four North Carolina cities are set for high-single-digit or low-double-digit home price growth next year, per Realtor.com, and the NAR highlighted Charlotte as a top spot in 2025.
Neighboring Tennessee also had one of the nation's highest inbound rates, at 62%. Knoxville was one of the more competitive smaller markets despite rent growth of just 1.5%, and it ranked 10th in the nation in homebuyers' searches. It's also on the NAR's list of standout markets next year. Meanwhile, Memphis saw 22.7% rent growth and is in line for 10.5% home price growth.
Kentucky's inbound rate of 56% was more modest. But it had Lexington with 9.9% rent growth, a lofty rental market competitiveness score, and the eighth spot in buyers' searches, as well as Louisville, which RentCafe said was the top trending rental market of 2024.
Jonathan Miller, the cofounder of the real-estate firm Miller Samuel, says the Southeast market is popular because it's relatively warm and has ample housing inventory.
"It's a combination of the weather and housing affordability," Miller said in a recent interview.
The nation's capital represented the bordering mid-Atlantic with a 63% mover inbound rate and a fifth-place ranking in homebuyers' searches, pushing prices up 10.2%. Washington, DC, was also one of the 30 most competitive rental markets, though supply kept price growth in check.
Rounding out the list was New Haven, Connecticut, which was arguably the hottest market. It was the fourth most competitive rental market this year, and its rent growth was easily the highest in the US in December at 35.7%. It also had 18.3% home price growth in November and is set for another 9.7% next year because of its Yale University ties and proximity to New York City.
What to expect in 2025
The US housing market has slowly thawed after freezing over as mortgage rates spiked. Some real-estate analysts expect sales to heat up in 2025, though others are more skeptical.
Optimists are calling for the biggest jump since the pandemic boom. The National Association of Realtors sees home sales rising 7% to 12% in 2025, including an 11% jump for new units, while eXp Realty's CEO is calling for 10% growth caused by sliding mortgage rates and rising supply.
But Realtor.com's sales forecast is more tempered at 1.5%, as is Miller's call for a 3% increase. The veteran real-estate analyst said mortgage rates would most likely stay above 6%, weighing on demand; plus, supply is also limited. Even still, he's expecting a 4% to 5% jump in home prices.
"If mortgage rates unexpectedly fall below 6%, we can have a housing boom," Miller said. "It just doesn't appear that that's in the cards, but there's a lot of upside potential in transaction volume, despite higher mortgage rates."
Miller said that against that backdrop, buyers will continue to seek out affordable markets, which are often correlated with abundant inventory. That's why the Sun Belt region was so hot in 2024.
Miller says this year's most popular markets will probably be among the winners next year. He didn't predict the next boomtown but said surges into Texas and Florida had run their course. Those states were red-hot in the early 2020s, though each had level moving flows this year.
"It's not that those markets are less attractive," Miller said. "There's less intensity from inbound migration as millions of new residents get situated. The rate of growth is no longer surging."
Yet it appears as if the exodus from large states with highly populated cities isn't over, as three of the five states with the most outbound movers were California, Illinois, and New York. Each of those states has relatively high taxes, and Miller has a hunch that some movers might try to preemptively move in anticipation of the expiration of state and local tax deductions scheduled for the end of 2025.