Buffalo, New York, will be the hottest housing market in the U.S. this year, according to a new report from Zillow.
The city topped a list of the 50 most populous metros for the second year in a row. Buffalo, located at the eastern end of Lake Erie near the Canadian border with a population about 1.16 million people, has seen solid job growth, increasing home values and a strong market for home sales.
Zillow reports that lower-than-average home prices and rent costs in Buffalo as well as in Midwest metros such as Indianapolis, Indiana; St. Louis; and Kansas City, Missouri, have bolstered demand in the region.
Buffalo has added roughly two jobs per permitted home and seen a 46% drop in home inventory since the pre-pandemic period of 2018 to 2019. Zillow predicted that home values will grow by 2.8% in 2025 from an average value of $260,537.
One thing Buffalo is not, though, is warm. The average temperature in January is about 34 degrees and rarely exceeds 50 degrees in its coldest month.
“In chilly Buffalo, competition among buyers will remain hot, with employment growing far faster than builders are adding homes,” Zillow Chief Economist Skylar Olsen said.
Olsen noted that homebuyers should have more options this year as the inventory of homes for sale grows, but they will also face “unpredictable mortgage rates.” Growth in home values has cooled off considerably since 2021, she added. Harford, Connecticut, is projected to have the highest expected home value growth at 4.2%.
Rounding out Zillow’s top five hottest markets were Indianapolis; Providence, Rhode Island; Hartford; and Philadelphia.
Notably, Virginia Beach, Virginia, moved up 23 spots from its 2024 ranking to 13th on the list. Memphis, Tennessee, fell the farthest, dropping 30 places, as new home permitting outpaced low job growth.
At the bottom of Zillow’s list were New Orleans, San Francisco, San Jose, Portland, Oregon, and Austin, Texas.
