Home Prices Hit Record Highs Discover The Hottest Cities On The Rise

 Home prices soared to a new record in March, driven by a gradual ease in mortgage rates and a housing supply shortage, according to the S&P Case-Shiller Home Price Index released Tuesday—but some cities are harder-hit than others.

 Home prices across the U.S. rose by 6.5% in March from a year earlier, up from the previous month’s 6.4%—posting the ninth straight month of record highs since June 2023, on a seasonal adjusted basis.

Prices across 10 major metropolitan areas grew by 8.2% year-over-year—up from February’s 8.1%—and prices in 20 major cities rose 7.4%, up from 7.3% annual gain last month with both indices reaching “another all-time high,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones in a release.

San Diego continued to report the highest price hike across 20 major metropolitan areas, at 11.1% from last year, followed by New York (9.2%), Cleveland (8.8%) and Los Angeles (8.8%)—showing “strong demand for urban markets,” noted Luke.

New York and L.A., the two largest population centers, account for around 30% of the 20-City home prices index—and have shown significant recovery, aligning with the national average annual price increase of 9.9% since 2020.

While home prices in San Francisco and Seattle are still trailing previous highs in May 2022—they recorded the strongest monthly gains recently, indicating a rebound in their housing markets, according to the Case-Shiller data.

Portland and Denver posted the slowest annual increases at 2.2% and 2.1%, followed by Minneapolis and Dallas at 3.3% and 3.6%, respectively.

Along with optimism about potential Fed cuts and easing mortgage rates in early March, the home price increase was fueled by continued home inventory shortages. New housing construction was down 4.3% from the previous year in March, according to the U.S. Department of Housing and Urban Development. The number of new residential constructions in the Northeast decreased by 57% from the previous year, resulting in its status as the “top performer” with an 8.3% annual home price gain, according to the Case-Shiller data. Conversely, home prices in the Sun Belt regions, including Tampa, Phoenix, and Dallas, which saw "top-tier performance" in 2020 and 2021, are now growing at a slower pace due to a surge in residential construction. An April report from Redfin finds that these areas “built a ton of new apartments in recent years” to meet the soaring demand from newcomers, which led to improved affordability. “COVID was a boom for Sunbelt markets, but the bigger gains in the last couple of years have been in northern metro cities,” said Luke.