Housing markets in the Northeast and Midwest are expected to heat up in 2025, according to a new Zillow report.
Buffalo, New York, is expected to have the hottest housing market in the U.S. for the second consecutive year.
The real estate marketplace also named Indianapolis, Indiana; Providence, Rhode Island; Hartford, Connecticut; and Philadelphia, Pennsylvania, in its ranking of the top five hottest markets, citing the cities' "relative affordability and supply that trails demand" as unifying factors.
Why It Matters
Homebuyers looking to swoop into flourishing markets may want to consider doing so before competition increases any further. According to Redfin, the median sale price grew 11.7 percent year-over-year in Buffalo, with increases between 7.7 percent and 24.3 percent for other cities ranked in the top five.
Housing prices have been a road block for some buyers, especially first time buyers. Zillow predicts home prices in the top five hottest markets will grow between 2.6 percent and 4.2 percent in 2025.
What To Know
Zillow assessed the top 50 metropolitan areas in the U.S. by population, accounting for factors like projected home value growth, the ratio of jobs created to the number of new homes permitted and the speed of home sales.
A "hot" housing market can be characterized by high affordability and demand. Currently, Buffalo's median sale price is $215,000 compared to $429,813 for the nation as a whole, per Redfin data.
Redfin also lists Buffalo, Indianapolis and Providence as "very competitive" housing markets, with Hartford and Philadelphia categorized as "somewhat competitive."
Median Sale Price By City, According to Redfin
- Buffalo: $215,000 (+11.7 percent)
- Indianapolis: $243,450 (+8.2 percent)
- Providence: $517,500 (+24.3 percent)
- Hartford: $280,000 (+7.7 percent)
- Philadelphia: $260,000 (20.9 percent)
Median Days on Market by City, According to Redfin
- Buffalo: 22 days
- Indianapolis: 21 days
- Providence: 23 days
- Hartford: 55 days
- Philadelphia: 48 days
Home Value Growth Forecast, According to Zillow
- Buffalo: 2.8 percent
- Indianapolis: 3.4 percent
- Providence: 3.7 percent
- Hartford: 4.2 percent
- Philadelphia: 2.6 percent
Jobs Per New Home Permitted, According to Zillow
- Buffalo: 2.0
- Indianapolis: 0.5
- Providence: 1.3
- Hartford: 1.1
- Philadelphia: 1.5
What People Are Saying
Skylar Olsen, chief economist at Zillow, said in a press release: "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,"
"Shoppers nationwide should see more options for sale than in recent years, along with slow and steady price growth. That's the good news. But both buyers and sellers should expect unpredictable mortgage rates."
What Happens Next
Housing market forecasts for 2025 generally predict gradual growth in inventory, sales and home prices throughout the year, with mortgage rates expected to hover in the 6 percent range.
At a November event, Lawrence Yun, chief economist for the National Association of Realtors (NAR), predicted "...new home sales to be 11% higher in 2025 and 8% higher in 2026" and "the median home price to be 2% higher in both 2025 and 2026."
Similarly, Redfin anticipates home prices will increase 4 percent this year, along with a rise in home sales compared to 2024.
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