Some embodiments provide a method for clustering a set of data compute nodes (DCNs), which communicate with each other more frequently, on one or more host machines. The method groups together guest DCNs (GDCNs) that (1) execute on different host machines and (2) exchange network data among themselves more frequently, in order to reduce interhost network traffic. The more frequently-communicating GDCNs can be a set of GDCNs that implement a distributed application, GDCNs of a particular tier in a multi-tier network architecture (e.g., a web tier in a three-tier architecture), GDCNs that are dedicated to a particular tenant in a hosting system, or any other set of GDCNs that exchange data among each other regularly for a particular purpose.