Austin's ranking drops among 2025's best-performing cities
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Austin continues to rank among the country's top-performing big cities, but slid from last year's top spot to No. 6 in an annual report ranking metros across a range of economic factors.
Why it matters: The Milken Institute's yearly rankings highlight U.S. cities with job growth, affordable housing, economic equality and other big draws.
- These areas offer high wages, plentiful jobs and thriving tech sectors — making them economic models for the rest of the nation.
How it works: The annual rankings from Milken — a nonpartisan, nonprofit think tank — are based on its Best Performing Cities index, which takes into account cities' labor markets, tech industry growth and economic access.
Zoom in: Austin received high marks for its robust tech sector and ranks first for job growth and wage growth over the past five years among large U.S. metro areas.
- "The state capital's five-year wage growth is especially impressive; at 68.2 percent, it is more than 10 percentage points higher than the large city with the next-highest five-year wage growth (Provo, Utah)," the report says.
- High-paying sectors such as "information, professional services and financial activities" grew by 42.8% from 2018-2023 compared to a 6.7% growth nationwide, according to the report.
Yes, but: The city's high housing costs and short-term job and wage growth lowered its ranking by the Milken Institute.
What they're saying: "Despite its impressive growth, Austin's economy may be beginning to face some headwinds," the report said. "Austin's low housing affordability ranking masks the progress made by the metro in reducing its housing shortage."
- The Milken Institute pointed to an analysis by global developer Hines which found that Austin has managed to close a major gap between housing supply and demand in the last decade, but there is still a lack of affordable housing.
- "The city will likely need to focus on providing affordable housing to continue attracting businesses and maintain its consistently high growth," according to the Milken Institute.
The big picture: Cities have largely emerged from the tumultuous times of the COVID-19 pandemic and "remain at the center of economic activity," as the report puts it.
- Raleigh, North Carolina; Ogden, Utah; and Salt Lake City, Utah, topped the list of this year's best-performing big cities.
- Rounding out the top 10: Huntsville, Alabama; Colorado Springs, Colorado; Austin; Fayetteville, Arkansas; Olympia, Washington; Palm Bay, Florida; and Boise City, Idaho.
Reality check: The report doesn't explicitly look at other quality-of-life factors people might consider when picking a place to live, like traffic congestion, public transit access or park space.
The bottom line: Our fine city still remains a great choice for those searching for a booming city that isn't New York, Chicago or L.A.