Northeast and Midwest markets are still sizzling hot
The regions continue to see significant price growth and elevated buyer activity, but national price growth is expected to slow this year as supply increases.
Key points:
- The Northeast was home to four of the top five states for price growth, all of which saw double-digit gains.
- The top three metros with the highest price growth over the last year were Miami, San Diego, and Chicago.
- Realtor.com found that the top 20 hottest markets among buyers are all in the Midwest and Northeast.
A pair of new reports on home price growth and buyer activity point to continued growth, particularly in the Northeast and Midwest. At the same time, both reports — one from CoreLogic and another from Realtor.com — suggest that home price growth is slowing.
Price growth likely to slow, but Northeast posts double-digit gains
According to CoreLogic, the price for single-family homes increased by 5.5% nationally between February 2023 and February 2024. But as supply eases, that pace is expected to slow to 3.1% over the next year, the report suggests.
"More inventory finally coming to market will likely translate to more options for buyers and fewer bidding wars, which typically keeps outsized price growth in check," said Dr. Selma Hepp, chief economist for CoreLogic. "Still, despite affordability challenges, homebuyer demand appears to favor already expensive, coastal markets with a limited availability of properties for sale."
Among states, the Northeast led the way, accounting for four of the top five states for price growth: New Jersey, where prices rose 12.5%; Rhode Island (11.6%), Maine (11.4%) and Connecticut (10%). South Dakota came in at No. 1 with 13.8% annual growth.
On a metro level, there was more regional variance. The three cities posting the highest price growth in the last year were Miami, where home prices increased 10.2%; San Diego, which saw prices climb 9.9%; and Chicago, where home prices went up 8.4%. However, out of the top five markets that were most at risk of home price drops, three were in Florida: Melbourne, Daytona Beach and Sarasota.
Other markets that CoreLogic deemed to be "overvalued" included Denver, Houston, Las Vegas and Phoenix. The nation's home price leaders — Miami and San Diego — were also listed as overvalued, though third-place Chicago was listed as a "normal" market.
Northeast and Midwest claim all of the top 20 'hot markets'
While CoreLogic's report focused on annual home price growth, a separate report from Realtor.com looked into which cities were getting the most buyer interest, based on listing views, as well as the number of days listings were active.
All of Realtor.com's top 20 "hottest" housing markets were located in the Northeast or Midwest, with the Northeast claiming 13 of those spots. The top five metros were Manchester, New Hampshire; Rochester, New York; Worcester, Massachusetts; Springfield, Massachusetts; and Columbus, Ohio. Ohio was the most represented state on the list with three cities making the "hot" list.
The trend may not be too surprising to real estate industry professionals and home price watchers over the last year. A number of market reports released over the past year highlighted the Midwest and Northeast specifically as being some of the hottest housing markets in the country.
Consistent with other reports on housing market conditions, Realtor.com researchers suggest that supply and relative affordability are key drivers of increased buyer interest.
"More affordable markets in the Midwest and Northeast grew in popularity as once-frenzied Southern markets cooled off," wrote Realtor.com senior economic research analyst, Hannah Jones.
But Jones also noted that the while "hot market price growth continues to outpace U.S. price growth, the margin has narrowed significantly" as demand has fallen.
That may allow "price growth to simmer in these markets, which suggests that more market balance is ahead."