""Markets are hotter where supply is more constrained," Zillow Chief Economist Mischa Fisher told Business Insider. "That's why you see that very pronounced cluster in the Northeast, where it can take longer to build, or it can be harder to build, or it can be more costly to build. Whereas in the Sun Belt, if you look at the inventory available compared to demand, home prices are, in many of those markets, down year-over-year.""
"Some of the cities on the list, like San Jose, California, have a high Zillow Home Value Index ($1,558,466), but finished in the top 10 mainly because of other high-performing metrics. According to Zillow, 55.6% of sales in San Jose, California, were over the list price as of November 2025 due to an inventory drop. "The inventory is still strained in those areas, so you still have enough to maintain a lot of competition among buyers there," Fisher said."
Zillow's 2026 hottest-market predictions prioritize home price growth and housing market competition, with Northeastern metros appearing more than any other region. Supply constraints in the Northeast — including longer build times, higher construction costs, and permitting difficulties — create concentrated buyer competition and faster price appreciation. No Sun Belt cities made the list, as inventory in many Sun Belt markets exceeds demand and year-over-year home prices are down. 'Hot' market criteria include speed of sales, frequency of seller price cuts, share of sales above asking price, and demand outpacing supply. Coastal high-value metros can rank highly when inventory drops and many sales exceed list price.
Read at Business Insider
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