Redfin Reports the U.S. Housing Market Gained $2 Trillion in Value Over the Last Year

(NASDAQ: RDFN) — The U.S. housing market gained $2.4 trillion over the last year, bringing its total value to $47.5 trillion, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s based on an analysis of the Redfin Estimate for more than 90 million U.S. residential properties as of December 2023.

In percentage terms, the total value of U.S. homes increased 5.3% from a year earlier in December, the biggest increase in 11 months, and was up 13.3% ($5.6 trillion) from two years earlier.

Housing demand is sluggish due to elevated mortgage rates and affordability challenges, yet home values keep rising. There are three primary reasons:

• There’s a shortage of homes for sale. Many homeowners are hesitant to put their houses on the market because they scored an ultra low mortgage rate in recent years, and selling would mean giving it up. Supply is even more constrained than demand, meaning buyers are competing for a limited pool of homes. That’s propping up values for both homes that are already for sale and those that could hit the market in the future.
• Home values hit a low about a year ago. The total value of U.S. homes was nearing a trough at the end of 2022, which is part of the reason year-over-year growth at the end of 2023 was so large. It’s typical for home values to cool in the winter, but they experienced an abnormally large slowdown in 2022 as the shock of surging mortgage rates sent a freeze through the housing market.
• More homes were built. While America is grappling with a housing shortage, it continues to build homes, which contributed to the gain in total home value last year.

“America’s homeowners are sitting pretty. They’re holding a massive amount of housing wealth, despite lackluster demand from buyers, because home values skyrocketed during the pandemic and now a supply shortage is preventing those values from falling,” said Redfin Economics Research Lead Chen Zhao. “Prospective buyers aren’t as lucky. The combination of elevated mortgage rates, high home prices and a limited pool of homes for sale means homeownership is about as unaffordable as ever. One bright spot for buyers is that mortgage rates should start declining before the end of 2024.”