These will be the most competitive housing markets in 2025, Zillow report predicts

(NEXSTAR) — While the national housing supply recently reached a four-year high, buying a home in some U.S. cities may be especially difficult in 2025, a new Zillow report suggests.

To make its predictions, Zillow reviewed multiple factors — including how quickly homes have been selling, and its own forecast for home value growth — in the 50 most populated cities nationwide.

Overall, Zillow's analysis determined cities primarily on the East Coast could have the hottest housing markets of 2025.

Where are the hottest housing markets?

For the second year in a row, Buffalo, New York, held the top spot on Zillow's list. The company pointed to the city's relative affordability and job market as the driving factors behind Buffalo's competitive real estate status.

"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, Zillow's chief economist.

The second-hottest market, Zillow predicts, will be Indianapolis. The metro, like other Midwestern cities that landed toward the top of the list, tend to have "lower-than-average home prices and rent costs," which have fueled the competition for buyers.

Zillow's hottest housing markets for 2025 can be seen on the map below:

Buffalo, Indianapolis, and Providence head Zillow's 2025 list of hottest housing markets, where competition among buyers will be strongest. (Zillow)

Virginia Beach, Virginia, jumped more than 20 spots over last year's rankings. According to Zillow, it earned the No. 13 spot on its list thanks in part to "job growth that has far outpaced new home permitting." Alternatively, Memphis, Tennessee, dropped 30 spots because the number of new homes being built is outgrowing job growth.

Also dropping significantly in the ranks were three Ohio metros — Cincinnati, Columbus, and Cleveland — which ranked as Nos. 2, 3, and 8 in 2024, respectively. This year, they ranked as Nos. 11, 12, and 14, respectively.

Other major metros that dropped down in the rankings were Orlando and Tampa, Florida; Atlanta, Georgia; Las Vegas, Nevada; and Los Angeles, California. You can view Zillow's full list here.

What will home buying look like in 2025?

Regardless of where you're shopping for a new home, it could still be difficult. Mortgage rates could be unpredictable throughout the year, Olsen warns, but there is good news: "Shoppers nationwide should see more options for sale than in recent years, along with slow and steady price growth."

Zillow currently reports that the strongest housing markets for sellers are in the Northeast. That includes multiple New York cities — Rochester, Syracuse, Buffalo, and New York City — as well as metros in Connecticut, Massachusetts, and Rhode Island. The only non-Northeastern city considered a "strong seller's market" is San Jose, California.

Cities primarily in the south, from Florida to Texas, are considered buyer's markets. Zillow ranks Cape Coral, Florida, at the top of that list, followed by McAllen, Texas; New Orleans; Miami; and Jackson, Mississippi.

The average 30-year mortgage rate hit 6.85% by to end 2024, the highest reported since July 2024, according to data from Freddie Mac. In a statement, Freddie Mac's chief economist Sam Khater said "an overwhelming undersupply of homes" is plaguing the market.

The Federal Reserve could cut rates, albeit slowly, in 2025, which could prove beneficial to mortgage rates. (While the Fed doesn't set mortgage rates, it does influence them.) Long-term mortgage rates generally track the yield on the 10-year Treasury note, which, in turn, is driven in part by the market's outlook for inflation and the Fed's benchmark rate.

That means that, at least indirectly, cuts to the Fed’s key rate can put downward pressure on mortgage rates, even if they don’t move in lockstep.

It's also unclear how President-elect Donald Trump could impact such rates. He did say Tuesday that "interest rates are far too high" while speaking at a press conference at his Mar-a-Lago club.

Topics

America’s frozen housing market is finally starting to thaw

After nearly three years of grappling with an expensive housing market, home buyers are showing signs of getting used to it.
MarketWatch - 7h
House of Huawei — inside China’s ‘most powerful company’

Eva Dou’s authoritative account of the secretive tech company that has become a flashpoint in US-China relations
Financial Times - 12h
Dozens of lawmakers beat stock market in 2024: Report

The stock portfolios of more than two dozen lawmakers once again outperformed the market as bans on congressional stock trading stalled, according to a new report from the trading trackers at ...
The Hill - 18h
Buffalo will be hottest housing market in 2025: Zillow

Buffalo, N.Y., will for the second year in a row be the hottest housing market in the country due to its job market stability and affordable home prices, according to a report released Tuesday by ...
The Hill - 19h
Mortgage rates inch up to start the year at a near six-month high. Will the housing market become more affordable in 2025?

The 30-year mortgage rate averaged at 6.91%, Freddie Mac said in its latest weekly survey on Thursday.
MarketWatch - 4d
Mike Johnson reelected as House speaker | Special Report

Louisiana Rep. Mike Johnson has secured enough votes to remain House speaker after a tense round of voting led to three holdouts. Two defectors ended up changing their votes to support Johnson. ...
CBS News - 4d
The frozen housing market shows few signs of thawing as 2025 begins

New year, same old real estate market: The high mortgage rates, scarce inventory and dismal affordability that have plagued housing look set to linger.
NBC News - 5d
NFL spices up 2025 Pro Bowl by adding new events: Here are the nine skills competitions that will be featured

Players will need to pull their weight in this contest
CBS Sports - 5d
The Most Inspiring Houses We Visited in 2024

From a tiny French fisherman’s cabin to a hexagonal home in Hawaii.
The New York Times - Dec. 30