(NEXSTAR) — The national housing supply recently reached a four-year high, but buying a home in some U.S. cities could become especially difficult by 2025, a new Zillow report shows. suggested in the report.
To make its predictions, Zillow considered multiple factors, including its own estimates of home sales velocity and home value growth in the nation's 50 most populous cities.
whole, Zillow analysis It determined that cities, primarily on the East Coast, could become the hottest housing markets in 2025.
Where are the hottest housing markets?
Buffalo, New York, maintained its top spot on Zillow's list for the second year in a row. company pointed to Buffalo's real estate competitiveness is driven by the city's relative affordability and job market.
“Building to keep pace with regional growth remains a critical part of maintaining housing availability and accessibility,” said Skyler Olsen, Zillow's chief economist. “Competition among buyers will continue to be intense because employment will grow much faster than the market.” .
Zillow predicts the second hottest market will be Indianapolis. The metro, like the other Midwestern cities that topped the list, tends to have “lower-than-average home prices and rents,” increasing competition for buyers.
Zillow's hottest housing markets for 2025 can be seen on the map below.
Virginia Beach, Virginia, moved up more than 20 spots from last year's ranking. It ranked 13th on the list thanks to “job growth that far outpaced new housing permits,” according to Zillow. Or Memphis, Tennessee, dropped 30 spots because new home construction is outpacing job growth.
Three Ohio metros (Cincinnati, Columbus, and Cleveland) also dropped significantly, ranking second, third, and eighth, respectively, in 2024. This year, they ranked 11th, 12th, and 14th, respectively.
Other major cities that fell in the rankings were Orlando and Tampa, Florida. Atlanta, Georgia. Las Vegas, Nevada. and Los Angeles, California. You can see the complete list on Zillow here.
What will home buying look like in 2025?
Regardless of where you choose to buy your new home, it can still be difficult. Olsen cautions that mortgage rates can be unpredictable throughout the year, but there is some good news. “Shoppers across the country have more retail options than in recent years and should see slow and steady price increases.”
Jiro Current report The strongest housing market for sellers is in the Northeast. This includes multiple New York cities such as Rochester, Syracuse, Buffalo, and New York City, as well as metros in Connecticut, Massachusetts, and Rhode Island. The only city outside of the Northeast that is considered a “strong seller's market” is San Jose, California.
Primarily southern cities from Florida to Texas are considered a buyer's market. Zillow ranks Cape Coral, Florida, at the top of its list, followed by McAllen, Texas. New Orleans; Miami; and Jackson, Mississippi.
The average 30-year mortgage rate will reach 6.85% by the end of 2024, the highest level since July 2024, according to Freddie Mac data. Sam Cater, Freddie Mac's chief economist, said in a statement that a “massive undersupply of housing” is plaguing the market.
The Fed may lower interest rates modestly in 2025, which could have a positive impact on mortgage rates. (The Fed does not set mortgage rates, but it does influence them.) Long-term mortgage rates are generally tied to the yield on the 10-year Treasury and, as a result, are partially dependent on the market's inflation outlook and market outlook. depends on. Fed benchmark interest rate.
This means that cuts in the Fed's key interest rate, even if they don't move in unison, could put downward pressure on mortgage rates, at least indirectly.
It's also unclear how President-elect Donald Trump might affect these rates. “Interest rates are too high,” he said Tuesday at a news conference at his club, Mar-a-Lago.
