The number of million-dollar cities in the US real estate market has reached a new historical high, reflecting the ongoing trend of rising home prices. The latest Zillow report from February 2024 shows that there are now 550 cities in the US with median home prices exceeding one million dollars, up by 59 cities from last year. This growth is mainly concentrated in states like California, New York, and New Jersey.

California hosts the most million-dollar cities with 210, surpassing the total of the next five states combined. Following California, New York has 66 million-dollar cities, and New Jersey has 49. Notably, New Jersey added 14 new million-dollar cities over the past year, leading the nation in growth.

Looking at metropolitan areas, the New York metropolitan area has the most million-dollar cities, totaling 106, an increase of 24 from last year. The San Francisco Bay Area follows with 69, and Los Angeles has 63, which added 7 new million-dollar cities over the past year.

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However, not all states have experienced the same growth. For instance, Florida saw a decrease of three million-dollar cities, and the Austin metropolitan area in Texas lost two. In contrast, Palm Bay Village emerged as a new million-dollar city in Florida.

This data might be unwelcome news for homebuyers. The continuous rise in home prices means that housing costs will keep increasing, challenging affordability for buyers. However, the value of an average American home has increased by 4.2% from last year, with a median value growth of 4.6% in million-dollar cities.

The report notes that due to the shortage of homes for sale, US housing prices are expected to remain high this spring. Additionally, as the impact of interest rate locks lessens, new listings are increasing. Later this year, a reduction in mortgage rates is expected, which could trigger a second wave of homebuying demand.

However, forecasts for mortgage rates suggest they may continue to hover at relatively high levels until progress is made towards the Federal Reserve's inflation targets. This means that, despite both buyers and sellers hoping for more favorable housing conditions, the decrease in interest rates may be constrained by economic data.