It was named third on a list of top cities to bring up children due to job prospects and the availability of affordable housing.
The city was ranked behind Bath and Newcastle on the Family Living Index.
But it outperformed cities in the south of the country, which are considered to be more affluent.
Cities were judged on factors affecting family life.
This included school rankings, crime, green spaces, house prices and employment.
Its average house price of £141,000 helped improve the over all standing.
However, a lack of local parks prevented it from being placed even higher on the list.
The lofty ranking comes despite Wolverhampton being named one of the worst places to live in 2016.
MoneySuperMarket, which compiled the index, said: “Wolverhampton scored highly on jobs and affordable housing, with an average house price of £141,458, to take third place.
“However, it missed out on the top two spots due to a lack of local parks.”
Wolverhampton’s Conservative leader, councillor Wendy Thompson, said the ranking was a boost for the city.
She said: “It’s nice to have a bit of good news.
“It is good for families as they need to feel happy where they are living and for the city to come out as well as that it shows there is a lot that is going right.
“It helps give a good indication for the future.”
The north and Midlands dominated the list, with Sunderland, Wakefield and Derby also making the top 10.
London was named as the worst city to raise a family, followed by Kingston upon Hull and Bristol.
Wolverhampton retained its position of first from the index last year.
The ranking comes at a time of major regeneration in the city.
Work includes a revamp of the train station and connection to the Midland Metro, as well as transformation of areas such as Heath Town, which have been planned to be completed over the next few years.