Buffalo skyline
Lake effect snow clouds hang over Lake Erie and the Buffalo skyline December 1, 2024 as seen from Hamburg, New York. John Normile/Getty Images

Buffalo, New York is set to be the hottest housing market of 2025, retaining its title from 2024, thanks to strong job growth and limited housing supply, according to a new report.

As new jobs fuel competition for homes, the demand continues to outstrip availability, driving up prices in cities throughout much of the country.

According to Zillow's market heat index, sellers held a strong advantage in negotiations in Buffalo, benefiting from affordability and high demand.

This strength stemmed from new jobs--which typically usher in new residents--which increased competition and drove up prices unless builders could match the additional demand.

Buffalo has the most new jobs per new home permitted — a key figure that's kept the New York city at the top of the list for two years.

The U.S. economy added about 180,000 jobs per month through November, according to the Bureau of Labor Statistics.

The top five cities, in sequential order, with the hottest housing markets include:

  1. Buffalo, N.Y.
  2. Indianapolis, Ind.
  3. Providence, R.I.
  4. Hartford, Conn.
  5. Philadelphia, Pa.

After U.S. housing sales surged in October, Zillow forecasted steady home value growth nationwide, though affordability challenges and fluctuating mortgage rates continued.

Developers AvalonBay Communities and institutional investors like Blackstone are betting big on single-family rental homes becoming a trend towards homeownership as traditional methods price out millennials, Gen Z and current renters who have already begun embracing tiny homes.

The Federal Reserve forecasted that housing inflation will likely ease in 2025 after the Case-Shiller index dubbed 2024 as the "most unaffordable housing market in history."

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