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Housing prices reached a new peak in September, according to a new report.
The report, released Monday by First American Data and Analytics, found that home prices increased 0.7 percent between August and September of 2023, and were up 6.7 percent between September of 2022 and September 2023.
The sustained increase in prices has come as the “lock-in effect” has kept homeowners from listing their homes and losing their lower mortgage rates, leading to a steep dropoff in housing supply.
“Rising mortgage rates continue to depress housing supply and suppress affordability, chilling the housing market. Preliminary September house price data suggests that the lack of supply is constraining the market more than reduced demand due to record-low affordability,” Mark Fleming, chief economist at First American, said in a statement. “Nationally, house prices continue to set new records as potential sellers sit on the sidelines, limiting supply, while buyers chase what few homes are available for sale.”
September was the sixth straight month home prices hit a new peak, according to First American’s data, with the average sale price hitting $448,650.
The report divides home price changes into three distinct categories: starter tier, mid-tier and luxury tier, with the starter tier seeing the largest jumps in price during September, suggesting that the strongest demand that exists right now is from aspiring first-time homebuyers.
“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 said. “As of 2022, more than half of all millennial households were homeowners, but many more are aging into their 30s, the prime homebuying 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.”
Pennsylvania experienced the highest year-over-year growth on First American’s Housing Price Index, increasing 7.8 percent. New York saw prices grow by 4.4 percent, Florida by 3.5 percent, Texas by 3.5 percent and California by 3.2 percent.
Miami was the metropolitan area with the highest year-over-year increase at 8.8 percent. It was followed by St. Louis at 8.2 percent, Anaheim at 7.4 percent, San Diego at 7.1 percent and Baltimore at 7 percent.