The cost of buying a home in major cities across the United States has shot up to its highest point in over a year. According to the most recent S&P/Case-Shiller data, the housing market isn’t showing signs of slowing down.

In January, the growth rate of house prices in significant US cities accelerated, marking the fastest increase we’ve seen in 14 months. Specifically, the 20-City Composite index, which tracks residential real estate prices in 20 major metropolitan areas, reported a 6.6% surge in prices compared to January 2023. This rise from December’s 6.2% growth rate might seem small, but it’s a clear indicator that the housing market remains hot.

Interestingly, this growth was just a tad under what economists had predicted—a 6.7% increase. Yet, it’s the most significant leap since November 2022, signaling a robust and resilient market.

A Closer Look at the Cities

While the overall picture shows growth, not every city is experiencing the boom equally. Comparing prices from December, the same index saw a slight dip of 0.1%, with 17 out of the 20 tracked cities seeing their house prices fall. This indicates that while year-over-year prices are on the rise, there’s some month-to-month variability, primarily due to high borrowing costs that continue to challenge buyers.

What About the National Picture?

Looking beyond the major cities, the National Composite index, which offers a broader view of the housing market, also reported significant growth. It rose by 6% year-on-year in January, up from 5.6% the previous month. This is yet another sign that the demand for houses across the country is pushing prices upwards, making it the quickest annual increase we’ve seen since 2022.

Diverse Markets, Common Trend

Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, shared his insights, “We’ve commented on how consistent each market performed during 2023 and that continues to be the case. While there is a large disparity between leaders such as San Diego versus laggards such as with Portland, the broad market performance is tightly bunched up. Homeowners most likely saw healthy gains in the last year, no matter what city you were in, or if it was in an expensive or inexpensive neighbourhood. No matter which way you slice it, the index performance closely resembled the broad market.”