US home values have bounced back from last year’s short-lived downturn, with values up $2.6 trillion in the past 12 months.
According to Zillow, the total value of the US housing market is now sitting at slightly less than $52 trillion, which is $1.1 trillion higher than the previous peak reached last June.
While a small amount of this growth can be attributed to a 0.7 per cent rise in the average value of a US home, the main factor driving values has been the big surge in new construction.
Zillow Senior Economist, Orphe Divounguy said the sale of newly constructed homes has been adding to the overall market value.
“A steady flow of new homes hit the market this spring and summer, helping chip away at the deep inventory deficit and boosting the total value of the market,” Mr Divounguy said.
“Despite the presence of higher mortgage rates, which deterred some home shoppers and kept many existing homeowners on the sidelines, enough buyers remained to keep the market moving.”
He said builders recognised the unmet demand and responded by starting more projects.
“New home sales rose this year while existing home sales fell, and should make up a bigger piece of the home sales pie for as long as rates remain elevated,” Mr Divounguy said.
Prices have been on the rise in many locations in the US, led by, in the past 12 months, Miami–Fort Lauderdale, which has seen values rise 8.6 per cent.
Chicago is also up 6.9 per cent, Philadelphia 6.8 per cent and New York 4.2 per cent.
According to Zillow, the four most valuable metro areas have remained largely unchanged over the past five years, led by New York, Los Angeles, San Francisco and Boston.
However, Miami has now moved into fifth spot, jumping all the way from ninth as recently as May 2021 to edge Washington, DC, out of the top five.
Of the six markets in which housing has gained the most value since the start of the pandemic, four are in Florida, including Tampa (88.9 per cent), Miami (86.6 per cent), Jacksonville (82.4 per cent) and Orlando (72.3 per cent).
Given the surging interest in Florida, the state has surpassed New York as the second-most-valuable housing market.
Large population growth is one reason for strong new construction figures in Florida, and the increased competition for existing homes has also helped raise home values.
California remains the largest property market with more than $10 trillion of value in its housing market or nearly 20 per cent of the national total.
While Florida, New York, Texas and New Jersey round out the top five.