A recent report by Zillow highlights a significant milestone in the US housing market, with a record 550 cities now boasting average home values above $1 million.
Rapid Growth in Million-Dollar Cities
The number of “million-dollar” cities has surged from 491 to 550 within just a year, showcasing the rapid appreciation in home values across various regions.
Concentration in California and Beyond
California leads the pack with the highest concentration of million-dollar cities, totaling 210. New York follows with 66 cities, while New Jersey saw a notable increase, reaching 49 such cities.
Factors Driving Price Increases
One of the primary drivers of escalating home prices is the surge in mortgage rates, with the 30-year fixed rate hitting 6.79% recently. This has led to fewer homes being listed for sale, creating a supply-demand gap and pushing prices upwards.
Impact on Home Affordability
Despite the affordability challenges posed by high mortgage rates, there are positive indicators. Homeowners are increasingly listing their properties for sale, leading to a 9.5% jump in existing home sales in February, as per data from the National Association of Realtors.
New Housing Supply and Affordability Trends
There’s optimism with a rise in housing completions to 1.7 million in February, marking a 15.6% increase from the previous year. This influx of new supply could help alleviate some of the affordability concerns in the housing market.
Median Home Prices and Growth Forecast
The median US home price stood at $349,216 in February, already showing a 4% increase from the beginning of the year. However, Zillow’s forecast suggests a more moderate home value growth of 0.9% for the year, signaling potential stability in the market.
