According to new Zillow research, Buffalo, New York, is projected to be the hottest major housing market in 2025. This is the first time a market has held the title for consecutive years. What should be the most competitive markets for buyers this year share two characteristics: relative affordability and a dearth of available homes.
“Construction that keeps pace with an area’s growth remains a crucial piece of keeping homes available and accessible. In chilly Buffalo, competition among buyers will remain hot, with employment growing far faster than builders are adding homes,” said Skylar Olsen, Chief Economist at Zillow. “Shoppers nationwide should see more options for sale than in recent years, along with slow and steady price growth. That’s the good news. But both buyers and sellers should expect unpredictable mortgage rates.”
Zillow’s prediction for local house value rise and the speed at which homes are selling are factors in this hotness rating of the 50 most populated metro areas in the country. It also takes into account the anticipated growth in owner-occupied homes and the number of jobs created for each new home that is allowed.
Buffalo was predicted by Zillow to be the trendiest market in 2024, and their prediction turned out to be accurate. According to Zillow’s market heat index, sellers had a significant edge in talks there during the course of the previous year. As a gauge of anticipated demand, Buffalo has the highest number of new jobs per new home allowed. Unless builders can keep up with the increased demand, new employment frequently translate into more inhabitants, increasing competition and driving up prices.
Even while affordability has marginally improved from the previous year, buyers are still very concerned about it. Buffalo and other Midwest metro regions like Indianapolis, St. Louis, and Kansas City have lower-than-average rent and housing prices, which have increased demand and propelled them to the top of the list.
Another strong factor is relative affordability. Zillow’s list of the most popular cities among house buyers in 2024 was dominated by nearby alternatives to pricey Northeastern metros like New York and Boston. Similarly, metropolitan areas like Providence, Hartford, and Philadelphia are highly ranked on this list.
The top five cities in Zillow’s 2025 house value appreciation projection are Hartford, Providence, Indianapolis, and Charlotte. With an anticipated growth rate of 4.2%, Hartford is in the lead. Even these notable metro areas appear modest in comparison to the double-digit yearly appreciation observed in 2021 and 2022, but home value growth is expected to level out this year.
Driven by job growth that has significantly surpassed new house permitting, Virginia Beach is the market that has risen the fastest from 2024’s list of hottest markets, jumping over 23 markets to the No. 13 position this year. By the same token, Memphis dropped 30 spots, the most since new housing permits overshadowed poor job growth. Salt Lake City also pushed its way onto this year’s list at number ten after the whole western half of the nation was excluded from last year’s top 10. The only other Western metropolis in the top 20 was San Diego, which came in at number 19.
Overall, in 2025, mortgage rates may continue their rocky trajectory, and fluctuations will significantly affect the kinds of homes that buyers can afford or even qualify for.
To read the full report, including more data, charts, and methodology, click here.
