While the national real estate market has shifted toward more moderate demand, certain regions continue to defy the trend. According to Realtor.com's February Hottest Markets Report, which assesses market demand and market pace, homes in the most sought-after markets are selling significantly faster than the national average, with low days on market, rising median list prices, and fewer price reductions.
The report indicates that homes in these high-demand areas spent between 33 and 51 days on the market, well below the national average of 66 days. Additionally, properties in these locations attracted two to four times more prospective buyers compared to the typical U.S. home.
For the past 17 months, housing markets in the Northeast and Midwest have consistently ranked among the nation’s top 20 hottest markets. These regions have experienced sustained high demand and limited inventory, fueling their continued prominence.
"Key cities in the Midwest and Northeast continue to see more demand, and homes in these cities spend less time on market," said Danielle Hale, chief economist at Realtor.com. "Looking at markets by hotness tells us the strength of demand versus supply in each area relative to others and which markets heavily favor sellers. Competitive market conditions that are found in the hottest markets are good for sellers, but can make buying more difficult for hopeful homeowners. However, this month's report shows the willingness of households to seek out affordability. More than half of the hottest markets were priced lower than the national median, suggesting that the possibility of a good deal is a factor keeping these metros in-demand among persistent buyers."
Although the Northeast and Midwest continue to dominate the rankings, this was not always the case. Before and during the early stages of the pandemic, the hottest markets were more geographically diverse. The South, for instance, has historically maintained a more balanced market due to its greater housing supply.
Currently, the West and South are seeing the largest increases in available housing, with inventory rising significantly over the past year. The influx of homes on the market has slowed the pace of sales and lessened competition, leading to cooling trends in these regions.
As the spring real estate season approaches, market activity is expected to increase. While the hottest markets continue to see strong demand, annual price growth in these areas has slowed to 0.9% on average—the lowest rate recorded since Realtor.com began tracking that data.
Despite a six-week decline in mortgage rates, they remain in the high-6% range, limiting incentives for both buyers and sellers. Additionally, declines in new home sales and pending home sales in January suggest that many buyers are still hesitant, possibly waiting for more favorable conditions.
The 40 largest U.S. markets have collectively cooled, dropping an average of 10 spots compared to last year—marking the most significant slowdown since March 2022. This also represents the sixth consecutive month of annual cooling in major metro areas.
Despite the slowdown, larger metro areas continue to attract buyer interest, with listing views exceeding the national average. Markets such as Philadelphia, Pa.; New York, N.Y.; Kansas City, Mo.; Baltimore, Md.; and Indianapolis, Ind. saw the most significant increases in market heat over the past year, reflecting shifting demand patterns.
Meanwhile, cities like Hartford, Conn.; Manchester, N.H.; Kenosha, Wis.; Rockford, Ill.; and Lancaster, Pa. remain among the nation’s most competitive markets, where homes continue to sell at an accelerated pace.
