At its highly anticipated mid-year MarketWatch, MarketNsight confirmed that its December 2024 housing forecast was on target, even amid tariff uncertainty and economic fluctuations. According to John Hunt, Principal and Chief Analyst at MarketNsight, the housing market in 2025 has returned to a familiar driver: interest rates.

“Despite all the noise, from elections to tariffs, we’re back to a rate-driven market,” said Hunt. “If rates don’t fall, the rest of 2025 will likely continue to mirror 2024.”

Key MarketWatch Takeaways

• MarketNsight’s 2024 forecast was accurate, and 2025 is tracking closely with the previous year.

• Interest rates remain the primary influence. Election impacts have faded as buyers and sellers respond directly to financing costs.

• Resale inventory has returned. In several major markets, inventory now exceeds pre-COVID levels, signaling the end of the much-discussed “lock-in” effect.

• Permits are down across the board. A MarketNsight poll of attendees points to slower sales as the main culprit.

• A sea change is underway. Hunt points to a national shift in the struggle for attainable housing.

The Affordability Crisis Reaches a Tipping Point

Referencing the recent Greater Atlanta Home Builders Association and HomeAid Georgia Housing Affordability Summit, Hunt emphasized that local governments and the building industry are beginning to recognize the urgency of the situation.

“We’ve been building the same single-family detached homes for 40 years,” Hunt said. “Meanwhile, we’ve neglected the full range of Missing Middle housing types people seek—duplexes, townhomes, mansion apartments and ADUs. In 40 years as a nation, we built 42 million single-family homes, and only 3 million were much-needed Missing Middle housing types.”

Building Smaller: The Quickest Path to Attainability

There are only two ways to make homes more attainable: build smaller and denser or build farther out. While the latter is geographically and environmentally limiting, reducing square footage, if zoning allows it, offers a faster and more scalable solution.

“We need to get back to $350,000 in Atlanta so people can afford a home,” Hunt commented.  At today’s average cost per square foot ($223.47), builders need to construct 1,566-square-foot homes to do this. These are likely townhomes or duplexes, and most municipalities do not allow smaller square footage plans in their zoning. Unfortunately, townhome starts have dropped since their 2021 peak. The square footage of homes has actually increased over the past five years in Atlanta.

“Zoning codes are still based on how we built homes in the 1980s, but the world has changed. Today’s buyers want Missing Middle housing,” Hunt said. “Cities are predisposed against density, and NIMBYism is blocking progress. We’ve got to fix that.”

National Trends and Atlanta’s Role as a Barometer

Atlanta is a national housing bellwether. Over the past five years, pending sales in Metro Atlanta have tracked within 1% of national data reported by the National Association of REALTORS©.

“Atlanta is the fourth-largest market in the nation, and what happens here is a direct reflection of what’s happening everywhere,” Hunt said.

The first half of 2025 has been volatile: a strong Q4 2024 was followed by a January sales dip due to extreme weather events, a weak April, a bounce-back in May and a flat start to June. Still, the net result is market equilibrium year-over-year—neither hot nor cold.

New vs. Resale: The Battle is Back

Resale inventory has surged, ending a two-year negative trend and signaling the end of the “lock-in” effect that kept existing homeowners from listing. Meanwhile, new home sales are down 5% in 2025.

“To be successful in the new home industry today, your job is to convince more buyers to choose new over resale,” Hunt said. “To do that, your product and pricing must be competitive against resale.”

Metro Atlanta currently has 4.3 months of supply (MOS). To reach a balanced market with 6 months of supply, the region needs 24,000 more homes.

National Context

The top 10 cities for housing permits in 2025 are Houston, Dallas, Atlanta, Phoenix, Austin, Orlando, Charlotte, Los Angeles, Nashville and New York City.

Notably, NYC completed a record-breaking 33,974 new homes in 2024, the most since 1965, after rolling back parking mandates and implementing the “City of Yes” zoning reforms. Hunt points to this as a national model for how zoning reform and bold planning can yield real results.

“Success breeds success,” Hunt said. “We must stop restricting supply and start building the housing people need.”