While the housing market is expected to continue to cool in 2023 due to high mortgage rates, affordability concerns, and inflation, the metro markets of Charlotte, North Carolina; Cleveland; Pittsburgh; Dallas; and Nashville, Tennessee, are projected to be the nation’s hottest housing markets in the calendar year. Charlotte tops the list because of the market’s forecasted annual home price growth.
The list of hottest markets for 2023 was compiled by Zillow based on an analysis of forecast home value growth, recent housing market velocity, and projected changes in the labor market, home construction activity, and number of homeowner households.
Jacksonville, Florida; Kansas City, Missouri; Miami; Atlanta; and Philadelphia round out Zillow’s top 10 hottest markets for 2023.
Cleveland’s second-place rank can be attributed to the market’s high market velocity and job growth, according to Zillow. While Pittsburgh is forecast to experience household declines, Zillow projects the metro will make up for the drop in owner-occupied homes with the fourth-highest ratio of jobs added per new home permitted among the largest 50 metro markets in the nation.
According to Zillow, markets in which buyers had the hardest time finding a home in 2022 are likely to see elevated demand in 2023 compared with other markets. Hartford, Connecticut; Cleveland; and Baltimore were among the markets which had the fewest listing days per home in 2022.
Charlotte is also projected to benefit from the projected formation of more households in 2023. According to demographic data, Charlotte is projected to form 6% more owning households in 2023. Jacksonville (5.7%) is also projected to benefit from demographic trends in 2023. Nine markets are projected to face negative demographic pressure in 2023, including San Jose and San Francisco in California, and Milwaukee.
San Jose and Sacramento in California, Minneapolis, and Denver are projected to be the coolest markets in 2023. Each metro market is characterized by expected annual home value declines and slower housing market velocity than other large markets (measured by total listing days on the market).