With high mortgage rates and rapidly rising house prices since the pandemic, it is difficult for millions of Americans to get on the housing ladder.
Although the market has cooled over the past year, those planning to buy in some parts of the Northeast and Midwest still face an uphill battle.
A new report from Zillow has outlined the hottest housing markets for 2025, and the top five are all in the Northeast and Midwest regions.
The hottest housing market for the coming year has been named Buffalo, New York.
Buffalo, which sits just below New York’s border with Canada, has an attractive labor market with two new jobs per home, according to the Zillow report.
This could entice new workers and young families to buy in the city, but in turn cause housing construction to continue to lag demand, explained Skylar Olsen, Zillow’s chief economist.
As such, Buffalo is expected to see home values rise another three percent this year, following a six percent increase in 2024.
Zillow calculates how hot a housing market is by combining projections for an area’s home values with how quickly homes are selling, as well as data on job growth and housing permits.
Buffalo, New York, has been named the hottest housing market for the coming year
A host of other cities – including Indianapolis; Providence, Rhode Island; Hartford, Connecticut; and Philadelphia – are expected to see home prices rise between three and four percent this year.
“In many of these areas, construction is struggling to keep pace,” Olsen says told CNN.
‘The reason new construction is so important now is that existing owners are stuck. That largely determines the pressure on prices.’
Increased mortgage rates have frozen the housing market as those with cheaper mortgages have put plans to move on hold.
According to Freddie Mac, the average 30-year fixed mortgage rate was 6.91 percent last week.
The ‘Oracle of Wall Street’ Meredith Whitney previously told DailyMail.com that interest rates need to fall below 6 percent to boost the housing market.
“Areas like Buffalo and much of the Northeast are so locked in, and the existing owners are just hanging on to it,” Olsen explained.
However, there are easier housing markets for those who want flexibility in location.
Providence, Rhode Island is also in the top five hottest housing markets for 2025
In Philadelphia, home prices are expected to rise between three and four percent this year
Indianapolis homes are expected to be snapped up quickly this year in a hot market
According to Zillow’s predictions, home prices will fall in several cities by 2025, including New Orleans, San Francisco, San Jose and Austin.
“In less competitive markets you have much more time to make a decision, homes are on the market longer and there are more of them available,” says Olsen.