September home price growth surged in 2024, marking the fastest pace since April, with a 0.5% month-over-month increase. This trend, reported by the Redfin Home Price Index (RHPI), reflects a growing demand for homes despite ongoing supply shortages. The steady increase in housing prices for the third consecutive month continues to push affordability challenges, as many homeowners remain locked into low mortgage rates from the pandemic era.
Why September Home Price Growth Accelerated
The September home price growth spike can be attributed to a combination of factors, including improved mortgage affordability when rates dipped as low as 6.08% in September. However, limited inventory remains a critical issue. The number of homes on the market today is around 20% lower than it was five years ago, further driving up prices. In this environment, buyers face steep competition, and prices are likely to keep rising until the spring of 2025, when more inventory is expected to hit the market.
Regional Variations in Home Price Growth
Not all metro areas experienced the same growth in September home prices. According to the RHPI, 13 of the 50 most populous U.S. cities saw declines in home prices, with San Antonio, TX, experiencing the largest drop at -1%. Meanwhile, some areas like Nassau County, NY, saw significant increases, with prices climbing 1.7%, followed by Philadelphia (1.6%) and Virginia Beach (1.4%).
The Future of Home Prices
Looking forward, experts like Redfin Senior Economist Sheharyar Bokhari predict that September home price growth will continue, especially if mortgage rates stay above 6.5% through the end of the year. Despite this growth, the year-over-year increase in home prices was only 6%, the smallest since December 2023, suggesting that the rapid acceleration of previous years is slowing down slightly.
September home price growth has been the fastest since April 2024, driven by a low supply of homes and strong demand. While affordability briefly improved, continued price increases are expected until more homes become available in the spring. The Redfin Home Price Index data provides valuable insights into these trends, emphasizing the complex dynamics of today’s housing market.
