For the first time, the same metro area tops Zillow’s forecast of the hottest housing markets in back-to-back years. Where?
Buffalo, NY, which is known for its relative affordability and limited housing supply, continues attracting homebuyers seeking value amid growing competition and stubborn affordability pressures.
According to Zillow’s analysis, Buffalo, Indianapolis, Ind., and Providence, R.I. lead the list of competitive housing markets due to their affordability and job growth. Buffalo, in particular, boasts the highest ratio of new jobs to new homes permitted, driving demand and keeping the market competitive.
“Construction that keeps pace with an area’s growth remains a crucial piece of keeping homes available and accessible,” said Skylar Olsen, Zillow’s chief economist. “In Buffalo, competition among buyers will remain hot, with employment growing far faster than builders are adding homes.”
Affordability Drives Demand
Affordable markets in the midwest, such as Indianapolis, St. Louis, Mo., and Kansas City, Mo., have gained traction as attractive alternatives to pricier cities. Similarly, northeastern metros like Providence, Hartford, Conn., and Philadelphia, Pa., rank high on Zillow’s list due to their proximity to expensive hubs like New York and Boston.
Hartford, Providence, and Indianapolis are also among the top markets for home value growth in 2025, with Hartford leading the pack at 4.2%. However, Zillow predicts that overall home value growth will level off compared to the rapid increases of 2021 and 2022.
As for the markets seeing a shift in fortunes, Virginia Beach saw the biggest jump in rank, climbing 23 spots to No. 13, thanks to robust job growth outpacing new home construction. Memphis, Tenn., on the other hand, dropped 30 spots due to low job growth and an oversupply of new housing.
Salt Lake City and San Diego represent the western U.S. in this year’s top 20, with Salt Lake City breaking into the top 10 for the first time.
Zillow vs. National Association of Realtors
Whereas Zillow’s analysis predicts markets in the Northeast and Midwest will see the most growth in 2025, the National Association of Realtors (NAR) named cities like Charlotte, Phoenix, and Boston as having the most potential in the new year.
Determining factors for each forecast come down to differences in prioritization and methodology.
While Zillow analyzes metrics such as buyer competition, job growth per new home, and expected growth in owner-occupied households, NAR’s metrics covered a broader spectrum, including average mortgage rate, share of millennial renters who can afford to buy a home, net migration to population ratio, share of households reaching homebuying age in the next five years, and share of out-of-state movers purchasing a home, for example.
Regardless of market, uncertainty around mortgage rates remains a critical challenge in 2025. Although rates are expected to stabilize around 6-6.5%, fluctuations could significantly impact buyers’ purchasing power and sellers’ ability to attract offers. This could lead to uneven activity across markets.
