For the second straight year, real estate website Zillow expects Buffalo in Western New York to be the nation’s hottest housing market in 2025, with Indianapolis, Providence, Harford, and Philadelphia rounding out the top five. Buffalo was also predicted to be the hottest market of 2024, making it the first market to hold the title in back-to-back years. Relative affordability and supply that trails demand are common threads among what should be the most competitive markets for buyers in 2025.
Nationwide, Zillow forecasts relatively slow and steady growth for both home values and sales in 2025, though affordability and unpredictable mortgage rates will present familiar headwinds. Inventory should continue to recover from a deep pandemic-era deficit.
Zillow forecasted Buffalo to be the hottest market in 2024 and that prediction proved prescient. Sellers held a strong advantage in negotiations there throughout last year, according to Zillow’s market heat index.
New jobs often mean new residents, which raises competition and drives up prices unless builders can match the additional demand. Buffalo has the most new jobs per new home permitted — a key component that’s kept Buffalo at the top of the list for two years running, along with expected appreciation.
Meanwhile, Indianapolis’s second-place rank can be chalked up to its strong home price forecast for this year, which is expected to be greater than the appreciation it experienced in 2024.
Relative affordability is a powerful force, too. Nearby alternatives to expensive Northeastern cities like New York City and Boston dominated Zillow’s list of the most popular cities among home shoppers in 2024. Metropolitan areas in the same vein — Providence, Hartford and Philadelphia — rank high on this list as well.
Rising fastest in the ranks from 2024’s hottest markets list is Virginia Beach, which leapt over 23 markets to the No. 13 spot this year, driven by job growth that has far outpaced new home permitting. Memphis fell the farthest by the same token, dropping 30 places, as new home permitting has eclipsed low job growth.
The final index was based on the following data:
- Forecast annual home value appreciation in Nov. 2025
- Forecast acceleration in home value appreciation, Nov. 2024 – Nov. 2025
- Listing days per home, Jan. 2024 – Nov. 2024
- Two-year change in total non-farm employment per two-year residential building permit total
- Projected change in owner-occupied households, 2024 – 2025