Darren McGee
Buffalo, a city in far western New York and the second largest in the state, has emerged as the country’s hottest housing market for 2025, according to Zillow, as high demand and limited supply send prices soaring.
With two new jobs created for every home built, Buffalo’s booming economy is drawing young families and professionals — but the city’s construction industry is struggling to keep up.
In turn, home values in Buffalo are expected to climb another 3% this year, following a 6% jump in 2024.
The market frenzy has also spread to other Northeastern and Midwestern cities like Indianapolis, Providence, Hartford and Philadelphia, where Zillow projects prices will rise 3% to 4% in 2025.
Meanwhile, mortgage rates remain sky-high, freezing the national market and locking homeowners into their existing loans.
Freddie Mac reported the average 30-year fixed rate at 6.91% last week, leaving many sellers on the sidelines.
The housing crunch is putting even more pressure on new construction to meet demand, but builders are falling behind, Skylar Olsen, Zillow’ s chief economist explained.
“Areas like Buffalo and a lot of the Northeast are so locked in, and existing owners are just holding on,” Olsen explained.
“In many of these areas, construction has really struggled to keep pace,” Olsen told CNN.
“The reason new construction is so important right now is that existing owners are locked in. That’s a lot of the determinant of pressure on prices.”
For buyers willing to explore other regions, relief may be on the horizon.
Zillow predicts home prices will fall in several cities, including New Orleans, San Francisco, San Jose and Austin, where competition is less intense.
“In less competitive markets, you have much longer to make your decision, homes spend longer on the market and there are more available,” Olsen said.