Buffalo is winning. Again.
It sounds weird if you’re used to the old-school rules where everyone fought over Austin or Phoenix. But the Zillow hottest housing markets 2025 list tells a very different story about where Americans are actually putting down roots. It’s not about tech hubs anymore. It’s about being able to afford a mortgage without selling a kidney.
The data is pretty jarring. For the second year in a row, Zillow has crowned Buffalo, New York, as the number one market in the country. If you’re looking for a common thread among the winners like Indianapolis and Providence, it’s basically just "affordability." While the rest of the country is staring at flat or even slightly dipping home values, these specific cities are seeing bidding wars that feel like 2021 all over again.
The Shocking Dominance of the Rust Belt
Honestly, nobody had "The Great Lakes Revenge" on their 2025 bingo card five years ago. Yet here we are. Buffalo took the top spot because it has a bizarrely perfect storm of economic factors. There are roughly two new jobs being created for every single new home permit issued there. You don't need a math degree to see the problem. Supply is stuck, jobs are growing, and the prices are still low enough that a middle-class family can actually compete.
Indianapolis is right behind it at number two. What’s wild about Indy is the momentum. While most markets are cooling off, Indianapolis is one of the few places where Zillow expects home value appreciation to actually speed up—jumping from 2.8% to 3.4%.
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Here is the breakdown of the heavy hitters that rounded out the top of the list:
- Providence, RI: It’s becoming the release valve for people priced out of Boston and New York.
- Hartford, CT: This city has the lowest inventory levels compared to pre-pandemic times—down a massive 63%.
- Philadelphia, PA: Steady, relatively cheap, and seeing way more homes sell above asking price than the national average.
Why the Sun Belt Is Fading
You’ve probably noticed that places like Austin and New Orleans didn't make the cut. In fact, they’re at the bottom.
Austin, once the darling of every "where to move" list, is now ranked as one of the coolest markets. It’s not that people don’t want to live there. It’s that the inventory finally caught up—and then some. Zillow’s economists noted that the demographic pressure in Austin is still high, with an 8.9% increase in households wanting to own, but the price-to-income ratio has finally hit a wall.
New Orleans is even worse off. The typical home value there is actually expected to drop by about 3.8% through 2025. When you compare that to Buffalo's growth, the "hotness" gap is massive.
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The "Fast" Market Metric
It’s not just about price; it’s about speed. In the hottest markets, you basically have to decide if you want a house before you’ve even finished the walkthrough. In Rockford, Illinois—which Zillow named the most popular city for shoppers—homes are going under contract in about five days.
Five days.
Most people take longer than that to pick a new couch.
This velocity is driven by "out-of-towners." In Rockford, three out of every five page views on Zillow come from people living outside the area. They’re looking at Chicago or Milwaukee prices, seeing Rockford, and realizing they can get twice the house for half the price. It’s a migration of the desperate.
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What Actually Makes a Market "Hot" in 2025?
Zillow doesn't just pull these names out of a hat. They use a specific mix of metrics that reflect our weird, post-pandemic reality.
The ranking looks at:
- Home Value Growth: How much equity you'll likely gain in 12 months.
- Market Velocity: How fast a "For Sale" sign turns into a "Sold" sign.
- Job Growth vs. New Construction: This is the big one. If a city adds 5,000 jobs but only builds 500 houses, that market is going to be a pressure cooker.
- Inventory Levels: Comparing today's available homes to the 2018-2019 "normal" era.
The Reality of 6% Interest Rates
Let’s be real for a second. The "hottest" market in 2025 is still a tough place to be a buyer. Mortgage rates have stayed stubbornly above 6%, and even though they’ve dipped occasionally, the "lock-in effect" is still very real. People who have a 3% rate from 2020 are simply refusing to move.
This has created a "vibe-shift" in real estate. Buyers are no longer looking for their "forever dream home." They are looking for "the home that doesn't make me go broke." This is why small-home living and "lifestyle renting" have become huge trends this year. Nearly 60% of renters now say they plan to keep renting because the math of buying just doesn't work, even in a "hot" market.
Actionable Steps for Navigating 2025
If you’re looking at these markets and thinking about jumping in, you need a strategy that isn't from 2019.
- Get a local "speed" agent: If you're looking in Hartford or Buffalo, you need an agent who can get you into a house the hour it hits the market.
- Look at the "Sleeper" cities: If the top 5 are too competitive, Zillow's data points toward Virginia Beach and Birmingham as places where fundamentals are strong but the "hype" hasn't peaked yet.
- Check the Job-to-Permit ratio: Before buying an investment property, look at the local building permits. If the city is building like crazy (like parts of the Sun Belt), your appreciation might stay flat.
- Prioritize inventory over aesthetics: In 2025, the best deal is often the house in a "low inventory" zip code, even if it needs a new kitchen. The scarcity will protect your value better than a fresh coat of paint will.
The 2025 housing market isn't about glitz; it's about the math of survival. The winners are the cities that stayed humble, kept prices low, and didn't overbuild during the boom.