BAM Key Details

  • According to a new Redfin report, the U.S. housing market has grown in value by $2 trillion over the previous year. 
  • The total value of U.S. homes has grown year over year by 5%, the biggest annual increase in almost a year, as the national housing shortage props up home values. 
  • Relatively affordable metros in the East and Midwest reported gains of over 10% while pricey markets and pandemic boomtowns reported declines. And home values in urban areas didn’t hold up as well as home values in the suburbs and rural areas. 

A new Redfin report on the value of the U.S. housing market shows a $2 trillion annual gain. In percentage terms, the total value of U.S. homes rose 5% over the last 12 months, marking the biggest increase in almost a year. 

The housing shortage has plenty to do with that. But some metros—most notably affordable East Coast and Midwest markets—are seeing home values rise by wider margins, while pricier metros and pandemic boomtowns are reporting year-over-year declines. 


Source: Redfin

The U.S. housing market has grown in value by $2.4 trillion over the past year, raising its total value to $47.5 trillion. 

Those figures are based on an analysis of the Redfin Estimate for over 90 million residential properties as of December 2023, showing a total value increase of 5.3% since December 2022, marking the biggest year-over-year value increase in 11 months. 

The total value of U.S. homes is also up 13.3% ($5.6 trillion) compared to two years ago. 

Buyer demand has slowed due to high mortgage rates and affordability challenges, but home prices continue to rise, mainly due to the following three reasons: 

  1. The housing shortage—Many homeowners hesitate to put their homes on the market because they’re currently locked into significantly lower mortgage rates, contributing to a drop in listings and fewer options for buyers, which drives up values for both existing homes for sale and future listings. 
  2. Home values hit a low close to a year ago—At the end of 2022, the total value of the U.S. housing market neared a trough, which is partly why year-over-year growth at the end of 2023 was more significant. Home values typically cool in the winter months, but they slowed to an abnormal degree in 2022 as buyer demand froze in the face of skyrocketing mortgage rates. 
  3. Homebuilders kept building—While the U.S. deals with a housing shortage, builders continue to build homes to breach the gap. That increase in construction contributes to last year’s overall gain in value for the U.S. housing market. 

Redfin’s analysis covers about 96 million homes for this report—up from 95 million as of December 2022 (thanks to new construction). 

Metros with the highest total value of homes:

  1. New York, NY – $2,428,001,729,845 ($2.43T)
  2. Los Angeles, CA – $2,123,633,948,287 ($2.12T)
  3. Atlanta, GA – $1,225,840,689,554 ($1.23T)
  4. Boston, MA – $1,196,065,333,764 ($1.2T)
  5. Anaheim, CA – $1,129,813,280,414 ($1.13T)
  6. Washington, D.C. – $1,022,618,617,532 ($1.02T)
  7. Chicago, IL – $990,942,727,610 ($991B)
  8. San Diego, CA – $987,570,269,408 ($988B)
  9. Phoenix, AZ – $987,464,661,663 ($987B)
  10. Seattle, WA – $911,245,138,957 ($911B)

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. 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.

Chen Zhao

Redfin Economics Research Lead

In December 2023, the average U.S. home had a value of $495,183—up from $474,740 one year earlier. 

Of course, not every homeowner has seen an increase in their home’s market value. The average U.S. home value climbed over $500,000 in both the summer of 2023 and the summer of 2022. So, some buyers who bought between those summers saw their home values dip. 

That’s how seasonality works; home values typically peak in the summer and trough in the winter. So, some decline between seasonal peaks is to be expected. 

Relatively affordable metros close to NYC post largest value jumps; Midwest also sees an uptick in home values

The total value of homes in more affordable NYC-adjacent metros reported the largest home value increases in the country. 

Last December, home values in Newark, NJ, posted a 12.8% year over year increase to $359.6 billion, marking the largest home value gain of any U.S. metro area. 

Next in line came two other East Coast metros: New Haven, CT (+11.9%) and Camden, NJ (+10.8%). Ranking at number four is Charleston, SC (+10.8%), followed by three Midwestern metros:

  • Elgin, IL (10.4%)
  • Grand Rapids, MI (9.8%)
  • Milwaukee (9.7%)

Of the 100 most populous metros, Redfin included in its report the 96 that had sufficient data. 

Metros like Newark and Camden are seeing larger-than-average increases in their home values partly because they’re attracting buyers who’ve been priced out of New York and who now have the option of working remotely. 

Midwestern metros like Milwaukee and Grand Rapids are seeing larger annual gains in home values for similar reasons: they’re relatively affordable. And when housing costs go up, so does buyer demand for more affordable homes. 

Metros with the biggest year-over-year increases in home values:

  1. Newark, NJ – 12.8% increase in home values YoY
  2. New Haven, CT – 11.9%
  3. Charleston, SC – 10.8%
  4. Camden, NJ – 10.8%
  5. Elgin, IL – 10.4%
  6. Grand Rapids, MI – 9.8%
  7. Milwaukee, WI – 9.7%
  8. San Diego, CA – 9.4%
  9. Richmond, VA – 9.3%
  10. Hartford, CT – 9.0%

Home value growth is lagging (or negative) in pricey metros and pandemic boomtowns

Four U.S. metros reported annual declines in overall home value:

  1. Boise, ID (-3.8%)
  2. New York (-1%)
  3. New Orleans (-0.8%)
  4. Stockton, CA (-0.7%)

And among metros posting year-over-year home value increases, these five metros posted the smallest gains: 

  1. Philadelphia (0.3%)
  2. Honolulu (0.8%)
  3. Austin, TX (1%)
  4. Denver (1.3%)
  5. Riverside, CA (1.6%)

Most of the metros listed above have become unaffordable for many buyers. And with the cap on demand, home values have little, if any, room to rise.  

A few examples: 

  • New York, Honolulu, Riverside, and Denver all have median home sale prices of $550,000 or more—well over the national median sale price of $402,343. 
  • In Boise and Austin, both of which have median home sale prices higher than the national average, mainly because the pandemic-fueled influx of out-of-towners caused home prices to skyrocket, pricing out many local buyers. 

Home values in urban areas aren’t growing as much as those in suburbs and rural areas

Here’s a quick snapshot of home value growth by neighborhood type as of December 2023: 

  1. The total value of urban U.S. homes grew by 3.6% year over year to $10.1 trillion
  2. The total value of suburban homes rose 5.6% year over year to $29.2 trillion
  3. The total value of homes in rural areas rose 6.3% year over year to $7.4 trillion

Source: Redfin

The total value of suburban homes is much greater than that of urban and rural homes mainly because most Americans live in the suburbs. 

Suburban neighborhoods account for roughly 56 million residential properties, compared to about 20 million each for rural and urban areas. 

Demand for suburban homes intensified during the pandemic, while demand for urban homes cooled, largely due to two factors:

  • The normalization of remote work meant employees no longer had to choose between living close to their workplace or making long, stressful commutes
  • The housing affordability crisis drove buyers outside their current market in search of more affordable homes—preferably with WFH-friendly amenities. 

Since then, many employers have asked their workers to return to the office, and that’s brought some buyers back to urban neighborhoods. But many Americans continue to work remotely, so the incentive to buy or build in more affordable areas is still strong.