While the national housing supply recentlyreached a four-year high, buying a home in some U.S. cities may be especially difficult in 2025, a new Zillow report suggests.
To make its predictions, Zillow reviewed multiple factors — including how quickly homes have been selling, and its own forecast for home value growth — in the 50 most populated cities nationwide.
Overall, Zillow’s analysis determined cities primarily on the East Coast could have the hottest housing markets of 2025.
Where are the hottest housing markets?
For the second year in a row, Buffalo, New York, held the top spot on Zillow’s list. The company pointed to the city’s relative affordability and job market as the driving factors behind Buffalo’s competitive real estate status.
“Construction that keeps pace with an area’s growth remains a crucial piece of keeping homes available and accessible. In chilly Buffalo, competition among buyers will remain hot, with employment growing far faster than builders are adding homes,” said Skylar Olsen, Zillow’s chief economist.
The second-hottest market, Zillow predicts, will be Indianapolis. The metro, like other Midwestern cities that landed toward the top of the list, tend to have “lower-than-average home prices and rent costs,” which have fueled the competition for buyers.
Zillow’s hottest housing markets for 2025 can be seen on the map below:
Buffalo, Indianapolis, and Providence head Zillow’s 2025 list of hottest housing markets, where competition among buyers will be strongest. (Zillow)
Virginia Beach, Virginia, jumped more than 20 spots over last year’s rankings. According to Zillow, it earned the No. 13 spot on its list thanks in part to “job growth that has far outpaced new home permitting.” Alternatively, Memphis, Tennessee, dropped 30 spots because the number of new homes being built is outgrowing job growth.
Also dropping significantly in the ranks were three Ohio metros — Cincinnati, Columbus, and Cleveland — which ranked as Nos. 2, 3, and 8 in 2024, respectively. This year, they ranked as Nos. 11, 12, and 14, respectively.
Other major metros that dropped down in the rankings were Orlando and Tampa, Florida; Atlanta, Georgia; Las Vegas, Nevada; and Los Angeles, California. You can view Zillow’s full list here.
What will home buying look like in 2025?
Regardless of where you’re shopping for a new home, it could still be difficult. Mortgage rates could be unpredictable throughout the year, Olsen warns, but there is good news: “Shoppers nationwide should see more options for sale than in recent years, along with slow and steady price growth.”
Zillow currently reports that the strongest housing markets for sellers are in the Northeast. That includes multiple New York cities — Rochester, Syracuse, Buffalo, and New York City — as well as metros in Connecticut, Massachusetts, and Rhode Island. The only non-Northeastern city considered a “strong seller’s market” is San Jose, California.
Cities primarily in the south, from Florida to Texas, are considered buyer’s markets. Zillow ranks Cape Coral, Florida, at the top of that list, followed by McAllen, Texas; New Orleans; Miami; and Jackson, Mississippi.
The average 30-year mortgage rate hit 6.85% by to end 2024, the highest reported since July 2024, according to data from Freddie Mac. In a statement, Freddie Mac’s chief economist Sam Khater said “an overwhelming undersupply of homes” is plaguing the market.
The Justice Department has added some of the biggest landlords in the U.S. to its antitrust lawsuit accusing the real-estate software company RealPage of using an algorithm that allowed landlords to illegally coordinate rent increases.
Camden Property Trust and Cushman & Wakefield were among the new co-defendants named Tuesday in a suit, first filed in August, that claims RealPage stifles competition with its rent-setting algorithm and maintains an illegal monopoly over rent-setting software.
The landlord defendants allegedly shared sensitive information about rental prices and used the algorithm to keep rent prices high, hurting millions of American renters, the DOJ said.
The other landlord defendants added to the suit on Tuesday were Greystar Real Estate Partners, Blackstone's LivCor, Cushman's Pinnacle Property Management Services, Willow Bridge Property Company and Cortland Management.
Cortland has reached a settlement with the Justice Department and agreed to cooperate with the government, stop using competitors' data to set rents and stop using the same algorithm as its competitors without a corporate monitor.
A representative for Cortland said the company was pleased to resolve the DOJ's civil investigation and added that the antitrust division has closed a criminal investigation into pricing practices within the multifamily rental industry, which in May prompted investigators to search Cortland's headquarters in Atlanta.
"We look forward to putting the federal government's investigations behind us in 2025," the representative said.
Representatives for the other defendants didn't respond to requests for comment.
According to the complaint, the landlords directly communicated with each other about rents, occupancy and other competitively sensitive topics. They also shared information with one another about the parameters of RealPage's software, the suit said.
The suit against RealPage is one of the most sweeping legal actions ever taken against a private company in the rental housing industry. Consumers are still feeling squeezed by steep rent increases that occurred during the pandemic and in the years since amid rising inflation.
RealPage is said to command 80% of the market for commercial revenue management software and allegedly deploys a price-setting algorithm that gathers confidential data on rents from competing landlords, helping them raise rents and collude on prices. RealPage has denied the allegations.
The U.S. Consumer Financial Protection Bureau sued a unit of Warren Buffett's Berkshire Hathaway on Monday, accusing it of pushing borrowers into unaffordable loans to buy homes from Clayton Homes, Berkshire's manufactured housing business.
Vanderbilt Mortgage and Finance, a unit of Clayton, allegedly ignored "clear and obvious red flags" that borrowers could not afford their loans, and unreasonably underestimated their ability to pay other debts and keep food on the table.
The CFPB said many borrowers incurred late fees and penalties when they fell behind on payments, and had their homes repossessed or filed for bankruptcy after their loans went into default.
In one instance, Vanderbilt allegedly approved a home loan for a couple with three children that left them with $57.78 a month for discretionary spending after paying expenses. The couple eventually defaulted, the CFPB said.
"Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home," CFPB Director Rohit Chopra said in a statement.
A spokeswoman for Vanderbilt and Clayton had no immediate comment.
The CFPB accused Vanderbilt of violating the federal Truth in Lending Act, and is seeking civil fines and restitution for harmed borrowers.
It filed its complaint in the Knoxville, Tennessee federal court. Vanderbilt and Clayton are based in Maryville, Tennessee, a Knoxville suburb.
Clayton is the largest U.S. builder of manufactured homes, including mobile homes, which are often bought by people who have low credit scores and incomes or live in rural areas.
It has been part of Omaha, Nebraska-based Berkshire since 2003, and had revenue of $9.1 billion in the first nine months of 2024.
Clayton was the subject of reports in the Seattle Times in 2015 alleging it drove Black, Hispanic and Native American borrowers into subprime loans they could not afford.
Buffett defended Clayton at the time, saying at Berkshire's 2015 annual shareholder meeting that he had "no apologies whatsoever about Clayton's lending terms."
The case is CFPB v Vanderbilt Mortgage & Finance Inc, U.S. District Court, Eastern District of Tennessee, No. 25-00004.
Leading Japanese homebuilder Sekisui House is quietly expanding operations in the U.S., bringing new investment and innovation to a home construction sector that is racing to keep pace with demand.
Last January, Sekisui House acquired major U.S. homebuilder MDC Holdings, which builds single-family homes under the name Richmond American Homes, in a $5 billion cash deal.
Sekisui House also owns American subsidiaries Woodside Homes, Holt Homes, Chesmar Homes, and Hubble Homes. Together, the company estimates those subsidiaries will deliver 15,000 new homes annually across 16 states.
It would make Sekisui House the fifth-largest builder in the United States by units, based on 2023 completion statistics compiled by trade publication ProBuilder. While Sekisui House’s construction stats remain far behind the biggest U.S. builders such as Lennar and D.R. Horton, the company’s quiet expansion has made it a significant player in the U.S. market.
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In Japan, Sekisui House is a high-end builder focused on custom homes, and the country’s No. 2 builder by revenue. But with Japan’s housing market decelerating due to a rapidly aging and shrinking population, the company has turned to America to expand its opportunities for growth.
Leading Japanese homebuilder Sekisui House is quietly expanding operations in the U.S., bringing new investment and innovation to a home construction sector that is racing to keep pace with demand.Bloomberg via Getty Images
Sekisui House CEO Yoshihiro Nakai said last year that the MDC acquisition “marks a significant advancement of our strategy to expand in the U.S. and bring the value of our philosophies and technology to U.S. homebuilding.”
He added, “We believe that we can become a one-of-a-kind entity in the U.S. by combining Japanese and U.S. technologies and, above all, sharing our passion for providing quality housing.”
Sekisui House plans to train U.S. construction workers in new skills
As soon as this month, Sekisui House plans to send a team of 20 experts to the U.S. to begin training local contractors such as carpenters, marking the company’s largest overseas training program to date.
The company hopes the new training program will help it grapple with a labor shortage that has plagued the U.S. homebuilding industry. The National Association of Home Builders says the country needs thousands of new skilled construction workers to address a housing shortfall of some 1.5 million units.
Sekisui House also owns American subsidiaries Woodside Homes, Holt Homes, Chesmar Homes, and Hubble Homes.Bloomberg via Getty Images
In Japan, homes are typically built with far fewer workers than in the U.S., in part because Japanese construction workers are multidisciplinary and trained in a variety of key tasks. A Financial Times analysis from 2017 found that the average Japanese construction worker produces about 37% more new homes each year than the average U.S. construction worker.
Now, Sekisui House is exploring how it could bring elements of the multidisciplinary construction worker approach to the U.S. through its new training program.
“Homebuilders may compete for labor, so having multiskilled workers is one of the initiatives we want to consider most,” Nakai has said, according to Japanese news outlet Nikkei Asia.
However, it remains to be seen whether the Japanese approach to homebuilding will translate to the U.S., where builders are constrained by thickets of regulations, and union rules often strictly prescribe which tasks must be performed by members only.
Last January, Sekisui House acquired major U.S. homebuilder MDC Holdings, which builds single-family homes under the name Richmond American Homes, in a $5 billion cash deal.Sekisui House
“Sekisui will face the same fundamental challenges that other U.S. builders are facing, namely high input costs (like land, labor, and lumber), regulatory hurdles, and weakened buyer demand in the current environment of high mortgage rates,” says Realtor.com senior economist Joel Berner.
“Sekisui may have some advantages as well, from a lower cost of capital than American builders that allows them to keep prices competitive, to a differentiated product from American builders that may attract buyers,” he adds. “Another opportunity for Sekisui to flex its financial muscles as a large international company may be to offer preferred financing directly to homebuyers in the form of mortgage rate buy-downs or below-market rates. ”
Will Americans embrace Japanese home design?
For now, Sekisui House continues to operate its U.S. subsidiaries under their original brands, offering homes built in the same style and with the same methods as they have been in the past.
For the first nine months of 2024, Sekisui House reported about $5 million in revenue from overseas sales, which was up 156% from a year earlier.Sekisui House
But as time goes on, the company plans to add new offerings and test the U.S. appetite for homes constructed with Japanese technology and design influences.
According to Nikkei Asia, Sekisui House expects to build 20,000 units in the U.S. in the year ending January 2032 and hopes that its Shawood line of Japanese-style wood houses will account for 3,000 of them.
The Shawood home line adjusts the structure of the home to its local environment and climate, controlling sunlight and airflow to reduce heating and cooling costs. The homes also focus on the use of advanced insulation material and “airtight” construction methods to boost energy efficiency.
However, the Shawood homes use framing techniques that require precision joining down to the millimeter. That level of precision will require special training, and it remains to be seen whether U.S. construction workers will embrace the new training and techniques required for the Shawood line.
Sekisui House continues to operate its U.S. subsidiaries under their original brands, offering homes built in the same style and with the same methods as they have been in the past.Sekisui House
Regardless, the MDC acquisition signals that Sekisui House is serious about expansion and investment in the U.S. market, which the company’s financial results show is a rapidly growing part of its total business.
For the first nine months of 2024, Sekisui House reported about $5 million in revenue from overseas sales. That was up 156% from a year earlier, and accounted for about 30% of the company’s total revenue, up from just a 15% share last year.
“It’s always great to see increased investment in homebuilding in the United States,” says Berner. “The housing supply gap is one of the most important domestic issues of our time, and if we’re serious about providing safe, affordable, sustainable places for American families to live, then we invite Sekisui House to show us what it can do.”
