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For the second year in a row, Buffalo, New York, has secured the top spot on Zillow’s list of the hottest real estate markets for 2025, earning the distinction of being the first market to secure the top spot in consecutive years.

Hot markets have expanded from the Northeast, Great Lakes and South regions to the Midwest and West, according to Zillow’s analysis, which predicts real estate markets will be the most competitive for buyers in the coming year. The key factors contributing to the creation of a “hot” market are relative affordability and supply falling short of demand, the analysis says.

Nationally, Zillow forecast relatively steady growth in both home values and sales in 2025, as well as inventory levels expected to recover from the pandemic. However, mortgage rates are expected to remain somewhat volatile.

Experts at Redfin and Fannie Mae, as well as Pulsenomics LLC, told USA TODAY in December that they expect the average home sales price to rise 3.8-4% and home sales to rise 4.2-5.1% in 2025. They also predicted that mortgage rates will continue to hover in the high 6% range.

“Construction that keeps pace with a region’s growth remains a critical factor in ensuring homes remain available and accessible. In chilly Buffalo, competition among buyers will remain hot as employment grows much faster than builders add homes,” Zillow chief economist Skylar Olsen said in a statement. “Buyers across the country should see more purchasing options than in recent years, along with slow and steady price growth. That’s the good news. But both buyers and sellers face unpredictable mortgage rates.”

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Zillow’s method for listing the hottest real estate markets

Zillow’s rankings are based on research into the country’s 50 most populous metro areas, taking into account Zillow’s forecast for local home value growth and the speed at which home sellers close deals with buyers. Zillow also measured the typical home value, average mortgage payment, typical rent and average number of days a home is on the market for each city.

The analysis also includes:

Expected increase in value from November 2024 to November 2025
Total employment growth over two years per residential building permit
Home Growth

Zillow’s Top 10 Hottest Real Estate Markets of 2025

The main reasons Buffalo was number one again according to Zillow? Job and wage growth, relative affordability and demand outstripping supply.

According to Zillow’s analysis, Buffalo has the most new jobs per approved new home — a measure of expected housing relative to the new residents brought to the area by new jobs. It also benefits from relative affordability, both in the context of the larger market and as an alternative to the much more expensive cities of New York City or other northeastern cities such as Boston. Below-average real estate prices and rental costs in Buffalo increased demand and helped Buffalo rise to the top.

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