Population flows that accelerated Sun Belt real estate over the last cycle are no longer a one-way bet, but the South still holds the upper hand as Midwestern states quietly gain ground, according to a new National Association of Realtors analysis of Census 2025 estimates.
For commercial investors, the pattern is less about a simple "move South" thesis and more about where net migration, natural increase and domestic inflows intersect to support durable demand in the next phase of the cycle.
The South's Lead, Recast for a Slower-Growth Era
The Realtor report confirms that the South remains the primary magnet for movers, even as overall U.S. population growth slowed to 0.5% between 2024 and 2025—only 1.8 million additional residents, the weakest gain since 2021. South Carolina, Idaho and North Carolina posted the fastest percentage population growth—1.5%, 1.4% and 1.3%, respectively—underscoring the persistence of secondary and tertiary growth markets that have been on investor radar for several years.
At scale, however, the growth story is still dominated by the three largest states: California at 39.3 million people, Texas at 31.8 million and Florida at 23.5 million, with their rank unchanged from the prior year. For investors, this anchoring at the top means the biggest Sun Belt and coastal markets continue to offer deep liquidity and tenant diversity even as their marginal growth rates vary.
The NAR analysis points out that only five states failed to grow at all in 2025—California at 0% and Hawaii, New Mexico, Vermont and West Virginia with small declines ranging from -0.1% to -0.3%—underscoring that the demographic story is about dispersion of growth, not broad-based contraction. That dispersion, in turn, is reshaping which metros can credibly support new office, industrial and single-tenant retail product versus where investors should be thinking more cautiously about long-term absorption.
Midwest Quietly Moves Into the Frame
One of the more notable shifts in the Realtor report is regional rather than state-specific: the Midwest was the only region in which every state recorded population gains in 2025. The region's growth is modest by Sun Belt standards, but it is being driven largely by positive natural increase—more births than deaths—rather than heavy reliance on migration flows.
Several Midwestern states broke into the top 15 fastest-growing states by percentage, including South Dakota at 0.9% and North Dakota at 0.8%, according to the NAR review of Census data. In absolute terms, Ohio added 39,889 people, Indiana 38,579 and Minnesota 33,000, placing all three in the top 15 for numeric growth. For investors, those numbers suggest that certain Midwestern markets may offer more demographic stability than their reputations imply, particularly for logistics, data centers and value-oriented residential strategies.
Minnesota's migration swing is especially striking: it reversed a small domestic migration loss in 2024—a net outflow of 204 residents—into a gain of 8,300 movers in 2025, the strongest domestic migration improvement in the country, the Realtor report notes. That kind of directional change can matter more for forward-looking rent and occupancy assumptions than headline growth rates, especially in secondary metros where modest net in-migration can tip the supply–demand balance.
South Still Dominates, Turnarounds Emerge
Domestic migration remains the clearest signal of where households and workers prefer to live and work within the United States and here the South still dominates. The region captured nine of the 15 states with the largest domestic migration gains, led by North Carolina with 84,064 net movers, Texas with 67,299, South Carolina with 66,622 and Tennessee with 42,389, according to the NAR report.
For CRE investors, those figures reinforce the thesis behind recent capital flows into Carolinas and Tennessee industrial corridors, suburban office and build-to-rent product: these are not marginal stories but sizable annual inflows that can support rent growth even in a slower macro backdrop. At the same time, the Realtor data shows domestic migration rising in 32 states overall, which suggests that investors looking only at established Sun Belt winners risk overlooking emerging demand pockets.
Ohio, Washington and Oregon illustrate that point through growth in domestic migration rather than sheer volume. Ohio's domestic migration increase reached 990.7% year-over-year, while Washington and Oregon posted gains of 434.6% and 228.3% respectively, with Ohio, Illinois and California recording the largest domestic migration gains in absolute terms among that improvement cohort. Those shifts hint at the potential for select coastal and Midwestern markets to regain some demographic momentum, which may ultimately support contrarian repositioning or redevelopment plays.
Net Migration and the International Slowdown
If domestic migration is powering the South and reviving a slice of the Midwest, the other side of the story is international migration, which pulled back sharply between 2024 and 2025. The NAR report notes that international migration fell from 2.7 million in 2024 to 1.3 million in 2025, a reduction that helped drag down overall U.S. population growth from the prior year and dampen net migration totals across nearly every state.
Even with that decline, Florida remained the top state for international movers, followed by Texas, California and New York, mirroring long-standing corridors that feed into gateway and near-gateway markets. For investors in multifamily, retail and urban infill assets, that persistence suggests that international inflows—though weaker—are still reinforcing demand in a handful of markets even as domestic movers tilt toward lower-cost regions.
The drop in international migration was broad enough that only two states—West Virginia and Montana—recorded growth in net migration in 2025, with West Virginia's net migration up by 1,231 people, or 22.7% and Montana's up by 55 people, or 0.8%. Yet at the top of the net migration leaderboard, the pattern is familiar: Texas, Florida, North Carolina, South Carolina and Georgia held the first five spots, with net gains of 234,774; 201,191; 130,954; 79,552 and 69,912 people, respectively, based on the Realtor analysis of Census data.
Those net migration totals provide a directional map for where demand for housing, warehousing and everyday services is likely to remain resilient, even if cap rates and financing conditions continue to adjust. For investors already exposed to these states, the data reinforces a hold-or-expand case; for those underweight, it offers further justification to prioritize pipeline and acquisition work where demographic support is most evident.
Natural Change: A Subtle but Important Backstop
Beyond migration, the Realtor report highlights natural change—the difference between births and deaths—as a quieter yet important pillar of long-term market stability. In aggregate, births and deaths were relatively stable compared to 2024, but several states posted notable increases in births, including Colorado at 4.6%, Idaho at 3.6%, South Carolina and Utah both at 2.8% and Florida at 2.2%, with Florida adding 4,758 births and Colorado 2,863 in absolute terms.
Twenty-six states improved their natural change rate over the year, suggesting a broader base of demographic support than headline migration figures alone might indicate. South Carolina, which leads the nation in percentage population growth, also recorded the largest turnaround in natural change, swinging from a negative figure of -525 in 2024 to a positive 564 in 2025—a 207.4% increase, according to NAR.
Kentucky, Florida and Montana also saw substantial increases in natural change growth—91.3%, 83.4% and 59.6%, respectively—adding another angle for investors who are assessing which markets are likely to sustain household formation over a longer horizon. In markets where both net migration and natural increase are trending in the right direction, underwriting assumptions about occupancy and rent growth may warrant a more constructive stance than national averages alone would suggest.
The broader context is that 2024's unusually strong 1% population growth was partly due to an update in Census methodology to better capture net international migration, which makes 2025's slowdown look more dramatic than underlying fundamentals alone would indicate.
For investors attuned to cycle timing, the Realtor report implies that while the demographic tailwind has eased, it has not disappeared; it has simply become more selective, rewarding closer scrutiny of where the numbers are truly strongest.
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