2023’s Five Hottest Housing Markets in the US

The US housing market may be hot, but the reasons why are complex. In order to uncover the most sizzling housing markets, we looked at which regions are seeing the most real activity: the highest home sales, median price rises, and transactional value.

For the most part, the hottest housing markets in the US are those that held on to their popularity through the pandemic. These included markets like North Carolina, Colorado, and Texas. Metro areas like Raleigh, Denver, and Austin received special notice as markets that proved resilient throughout the pandemic and remain in demand today.

Which markets are seeing the most activity, and how do these markets compare favorably to other real estate markets in the US? Let’s take a deeper dive.

The hottest housing markets in the US

According to US News and World Report, the national average value of the housing index was 64.4, with the scale ranging from 1-100. That reference point reveals what specific markets saw above-average index ratings, which include:

• Raleigh, NC: 71.7
• Denver, CO: 67.5
• Austin, TX and Durham, NC: 67.3
• Phoenix, AZ: 66.9
• Richmond, VA: 66.8

Why did these markets perform so well? These markets benefited from plenty of interest during the pandemic when people sought more space to make work-from-home life more bearable.

But they’ve also shown resilience as the world has moved on from the pandemic and economic conditions have opened up. And US News also points out that while these are large metropolitan areas, they don’t come with the high-cost housing of major markets like New York, Los Angeles, and Chicago.

These housing markets are large enough to provide a few advantages that continue making them attractive:

• Jobs. Cities like Denver and Raleigh offer plenty in the way of work and rank in the nation’s top 40 job markets.
• Demand. Raleigh-Durham, Denver, and Colorado Springs had the highest housing demand in December 2022. Meanwhile, Austin, TX, had a robust supply of housing. They have seen a wave of new people seeking a place to live, particularly those from the coasts.
• Amenities. Phoenix, AZ, is a good example of a large city with plenty of amenities and an area where prices don’t necessarily reflect what you might expect in San Francisco or New York City.

The housing market can be complex, as it depends on factors like unemployment rates, consumer sentiment, sale prices, and construction, which is why no single variable is responsible for creating a hot housing situation. Typically, it’s a combination of factors like lower living costs, job demand, and access to amenities that encourage people to move to a specific area.

The US News index keeps an eye on movements in housing markets. The recent article also highlighted some potential markets to watch based on data changes between November and December 2022, going into 2023. Portland, OR, Richmond, VA, and St. Louis, MO, had the most changes in activity.

What does a high index score mean?

This data comes from the US News Housing Market Index. This interactive tool lets users browse specific markets by several variables. The index takes a lot of factors into account, including:

• Home prices: This is obviously one of the top variables for analysis. The tool examines home prices, including rent prices and median home prices.
• Home occupation: How many rental vacancies are in an area? If this number gets too high, it suggests that too many people are leaving the area or that it is over-supplied. Either way, a low home occupation is a surefire sign that a housing market isn’t as robust as it could be.
• Unemployment rate: This helps the housing market index get a hold on an area’s job market. The unemployment rate is just one indicator of how many jobs are available and doesn’t reflect an entire job market. But if the unemployment rate is too high, it could indicate not many companies are hiring, or the area could be experiencing a recession.
• Builder sentiment: New home construction is always a key indicator of the housing market’s health. If people aren’t building new homes, it means that the housing market isn’t active enough for people to take that risk. Other issues, like high construction costs and poor consumer sentiment, can influence how suppliers feel about building in a specific housing market.
• Construction expenses: The more expensive it is to build in an area, the more those expenses can weigh on the overall housing market. If an area is hot enough for home builders to overlook these expenses because of the resale value of the home, however, it can be an indicator of an “on fire” housing market.

Typically, the US News index will list any specific variables weighing down a market or propping it up. This makes the index an invaluable resource for anyone considering a particular high-activity metro like Raleigh, NC. That way, people considering an area can look at the variables and assess whether to consider buying a home there.