The 10 U.S. States with the Fastest Rising Home Prices as of August 2024

The housing market in 2024 has surprised many with its resilience, especially in certain states where home prices continue to climb despite higher mortgage rates. As a buyer or investor, it’s crucial to stay informed about these trends to make the best possible decisions. In this blog, we’ll explore the top 10 states where home prices are surging the most this year.

1. New York: A Tale of Low Inventory

New York has seen a 6.3% increase in home values over the last year. Despite losing 143,000 residents in 2023, the state’s housing market is still strong, primarily due to low inventory. The number of homes available for sale is about 30% below the long-term average, pushing prices up even as people leave.

2. California: The Most Expensive State

California’s home prices have risen by 6.3%, making it the most expensive state to buy a home, with the typical house now valued at $783,000. A significant factor driving this is the lack of new home construction, with building permits at half of what they were at the peak of the last housing bubble in 2005. High permit fees, environmental regulations, and a business-unfriendly environment deter new construction, exacerbating the housing shortage.

3. Illinois: A Surprising Rise

Illinois has experienced a 7% increase in home prices, with values rising from $240,000 to $257,000. Despite ongoing population decline, particularly in Chicago, the lack of inventory is driving prices higher. The state currently has only 14,800 active listings, about 50% below the long-term average.

4. Ohio: Affordability Attracts Buyers

Ohio’s home prices have risen by 7.1%, with significant growth in cities like Cleveland, Toledo, and Columbus. Unlike other states on this list, Ohio is experiencing positive migration trends, with 29,000 net people moving to the state in 2023. The affordability of Ohio’s housing market is a key factor driving this growth.

5. Maine: A Market of Vacation Homes

Maine’s home prices have surged by 8.3% in the last year. The state’s market is heavily influenced by out-of-state buyers from places like Boston, driving prices higher, particularly in Portland. With 20% of homes in Maine being absentee-owned, the state’s housing market is unique, and prices continue to rise despite the limited local demand.

6. Rhode Island: Boston’s Affordable Neighbor

Rhode Island has seen home prices increase by 8.5% over the past year. The state’s housing market is closely tied to Boston, with many residents moving to Rhode Island for more affordable housing. This influx has driven prices up, especially in Providence, where homes are still about 30% cheaper than in Boston.

7. New Hampshire: A Collapse in Inventory

New Hampshire’s home prices have risen by 8.6%, driven by a severe shortage of available homes. With only 1,400 homes on the market, inventory remains about 60% below the long-term average, causing prices to climb.

8. Massachusetts: Limited Building, High Demand

Massachusetts has experienced an 8.7% increase in home prices, with significant growth in Boston and Worcester. The state’s strict zoning laws and low building permit rates have contributed to the housing shortage, keeping prices high.

9. New Jersey: The Exodus from New York

New Jersey’s home prices have surged by 9.4% over the last year. The state has seen an influx of residents from New York City, which has kept inventory low and prices high. With only 11,500 homes on the market, New Jersey’s housing market remains highly competitive.

10. Connecticut: The Hottest Housing Market in 2024

Connecticut tops the list with an 11.4% increase in home prices, making it the fastest-appreciating market in the country. The state’s proximity to New York and Boston, combined with a significant shortage of homes, has driven prices up dramatically.

Final Thoughts

As a buyer or investor, it’s essential to research your local market thoroughly. Understanding the trends in your area can help you make informed decisions in this challenging housing market. For detailed insights, consider using tools like the Reventure App, which offers data on inventory levels, price forecasts, and more, to help you navigate the market with confidence.

Empower yourself with the knowledge to make the best decision possible when it comes to buying a home in 2024.

Why Home Prices Are Defying Expectations: A Closer Look at the Current Housing Market

As we progress through the second half of the year, many housing market watchers have been anticipating a slowdown in home prices. However, contrary to these expectations, prices have remained resilient, even as the supply of homes on the market has begun to rise. Understanding why this is happening requires a closer look at the unique economic forces at play.

A Market Like No Other

We are currently navigating a housing market shaped by a series of unprecedented economic events. From the foreclosure crisis and the Great Recession to the COVID-19 pandemic and the rapid fluctuations in mortgage rates, the market is unlike anything we've seen before.

During the housing boom of 2005, the supply of homes surged, only to be followed by a wave of foreclosures that flooded the market. This led to a significant slowdown in home construction, and by 2012, newly built homes accounted for just 6% of the total housing supply. The pandemic then further reduced overall supply as demand surged during its first two years. Now, although supply is gradually increasing, it's doing so in a somewhat unexpected way: primarily through newly built homes.

The Divergence in Supply

Today, the supply of newly built homes is almost three times that of existing homes. Typically, the supply of new and old homes tracks closely together, but the market dynamics have shifted. New construction now makes up 30% of total inventory, a figure that is notably high compared to historical trends.

The rapid changes in mortgage rates have played a significant role in this shift. Rates dropped to historic lows at the start of the pandemic, only to spike to 20-year highs just two years later. This volatility has caused many homeowners who might have considered moving up to stay put instead, further constraining the supply of existing homes. At the same time, buyers are increasingly seeking out more affordable options, leading to a higher demand for newly built homes in the lower price ranges.

Demand for Affordable Housing

The supply of homes in the $100,000 to $500,000 price range has seen the most significant increase. However, demand in this segment remains so strong that these homes are being quickly absorbed, which is why prices continue to rise despite the growing inventory.

Builders Adapting to Market Conditions

For home builders, the focus has shifted to meeting the demand for affordable, entry-level homes. Builders like DR Horton and KR Home, which offer more budget-friendly options, are experiencing strong sales. On the other hand, luxury builders like Toll Brothers are also seeing success, but this is largely due to their reliance on wealthier, less mortgage-dependent buyers.

Interestingly, the large supply of homes that appears in market data doesn't fully reflect completed homes. Builders have significant control over the supply chain, deciding when to start or complete construction based on market conditions. This means that while there may be a nine-month supply of homes on paper, only about 20% of these homes are actually completed, giving builders flexibility in managing inventory.

What If Mortgage Rates Fall?

One of the key factors holding back the market is the current high mortgage rates. Many potential sellers, particularly aging Baby Boomers, are hesitant to give up their low-interest mortgages to take on a new, higher rate. However, if rates were to drop back into the 6% range, we might see a surge in seller activity. Lower rates would make selling more attractive, potentially leading to an increase in existing home listings, which could, in turn, stabilize prices.

In conclusion, while the market is seeing a rise in supply, it's primarily driven by newly built homes, and demand remains robust, especially in the more affordable price ranges. This unique combination of factors is why home prices continue to climb, defying expectations. The future of the housing market will likely depend on how mortgage rates evolve and how builders manage their supply in response to ongoing demand.