The total value of U.S. homes jumped 5%, the biggest gain in nearly a year, as a shortage of houses for sale propped up values. Affordable East Coast and Midwest metros saw gains of over 10%, while pricey metros and pandemic boomtowns saw declines.
The U.S. housing market gained $2.4 trillion over the last year, bringing its total value to $47.5 trillion.
This is according to an analysis of the Redfin Estimate for more than 90 million U.S. residential properties as of December 2023. This data is subject to revision.
In percentage terms, the total value of U.S. homes increased 5.3% from a year earlier in December, the biggest increase in 11 months, and was up 13.3% ($5.6 trillion) from two years earlier.
Housing demand is sluggish due to elevated mortgage rates and affordability challenges, yet home values keep rising. There are three primary reasons:
“America’s homeowners are sitting pretty. They’re holding a massive amount of housing wealth, despite lackluster demand from buyers, because home values skyrocketed during the pandemic and now a supply shortage is preventing those values from falling,” said Redfin Economics Research Lead Chen Zhao. “Prospective buyers aren’t as lucky. The combination of elevated mortgage rates, high home prices and a limited pool of homes for sale means homeownership is about as unaffordable as ever. One bright spot for buyers is that mortgage rates should start declining before the end of 2024.”
The average U.S. home was valued at $495,183 as of December, up from $474,740 a year earlier. Of course, not every homeowner has seen their property increase in value. The average home value jumped past $500,000 in both the summer of 2023 and the summer of 2022, meaning the typical homeowner who bought during those times has lost value. It’s worth noting that this data is seasonal, and home values typically peak in the summer and trough in the winter.
The total value of homes in Newark, NJ rose 12.8% year over year to $359.6 billion in December—a larger gain than any other metro. Next come two other East Coast metros: New Haven, CT (11.9%) and Camden, NJ (10.8%). Ranking fourth is Charleston, SC (10.8%), followed by three Midwest metros: Elgin, IL (10.4%), Grand Rapids, MI (9.8%) and Milwaukee (9.7%).
Redfin analyzed the 100 most populous metro areas and included in this analysis the 96 that had sufficient data.
Places like Newark and Camden are likely seeing home values jump in part because they’re attracting demand from people who are priced out of New York and can now work remotely. Midwestern metros like Milwaukee and Grand Rapids are experiencing home value gains for a similar reason: They’re affordable, and when mortgage rates and home prices are elevated, demand for affordable homes goes up.
Four metros saw declines in overall home value: Boise, ID (-3.8%), New York (-1%), New Orleans (-0.8%) and Stockton, CA (-0.7%). The metros with the smallest increases were Philadelphia (0.3%), Honolulu (0.8%), Austin, TX (1%), Denver (1.3%) and Riverside, CA (1.6%).
Most of the metros above have something in common: They’ve become unaffordable for many homebuyers, so home values no longer have much room, if any, to rise, because there’s a cap on demand. New York, Honolulu, Riverside and Denver all have median home sale prices of at least $550,000—well above the national median of $402,343. And in Boise and Austin, which also have median sale prices above the national level, many people are priced out because an influx of out-of-towners caused home values to skyrocket during the pandemic.
The total value of homes in urban areas rose 3.6% year over year to $10.1 trillion in December. Meanwhile, the value of homes in the suburbs rose 5.6% to $29.2 trillion and the value of homes in rural areas increased 6.3% to $7.4 trillion.
The suburbs came back into vogue during the pandemic while cities fell out of favor—largely due to the shift to remote work and the housing affordability crisis. While cities have bounced back to some extent as employers have asked workers to return to the office, many Americans still work remotely, incentivizing homebuying and building in far-flung, affordable areas.
Suburban housing has a much higher total value than rural and urban housing simply because most Americans live in the suburbs. There are about 56 million residential properties in the suburbs, compared with just over 20 million each in rural and urban areas.
The table below comes from a list of the 100 most populous metro areas, four of which were excluded due to insufficient data.
This analysis estimated current (December 2023) home values using the Redfin Estimate, MLS data and public records. The Redfin Estimate covers more than 90 million single-family homes, condos, townhouses and 2-4 unit multifamily properties, and is available in most but not all parts of the U.S. Historical values were imputed using public records and MLS data on price per square foot trends by zip code (or city, county or state when zip-code data was insufficient). Both existing homes and new-construction homes are included in this dataset, which dates back to the year 2000. Homes are not added to the dataset until they are first built or sold.
Homes are determined to be rural, suburban or urban based on categories for the census tract of the property from the U.S. Department of Housing and Urban Development (HUD). HUD has a model that describes neighborhood types based on responses to the 2017 American Housing Survey.
