U.S. home prices surged in September, as sellers sat on the sidelines and buyers chased what few homes were available for sale.
According to the First American Data & Analytics Monthly Home Price Index Report, home prices hit a new peak, rising 0.7% from August and jumping 6.3% compared with September 2022.
It was the sixth consecutive month that home prices increased on a month-over-month basis.
Looking at home price growth in the five most populous states, Pennsylvania saw the largest year-over-year increase in September at 7.8%, followed by New York at 4.4%, Florida at 3.5%, Texas at 3.5% and California at 3.2%.
Only two states saw a year-over-year decrease in home prices – South Dakota, which was down 11.2%, and Nevada, down 0.7%.
“Rising mortgage rates continue to depress housing supply and suppress affordability, chilling the housing market,” says Mark Fleming, chief economist at First American, in the report. “Preliminary September house price data suggests that the lack of supply is constraining the market more than reduced demand due to record-low affordability.
“The fact that the starter home price tier continues to outperform the middle and luxury price tiers in many markets suggests that first-time home buyer demand remains resilient despite significantly lower affordability,” Fleming adds. “As of 2022, more than half of all millennial households were homeowners, but many more are aging into their 30s, the prime home-buying age, and seeking to buy instead of rent.
“While less affordable than a year ago, the pace of starter tier price growth in markets like Miami, Pittsburgh and St. Louis suggests homeownership demand among millennials is far from dead,” he says.