Home prices increased 0.3 percent month-over-month in May on a seasonally adjusted basis, the fastest growth rate since January, according to a report from Redfin. Prices rose 2.5 percent from a year earlier, the fastest year-over-year growth in six months.
The Redfin Home Price Index (RHPI) measures how sale prices of homes have changed since their previous sale. May data covers the three months ending May 3.
Home-price growth picked up steam in May because that month’s prices reflected deals that went under contract in April, when homebuying demand strengthened as mortgage rates declined, the RHPI showed.
Closed home sales hit their highest level since 2022 in May, and while inventory is also ticking up, there still aren’t enough desirable, affordable homes on the market.
Pending sales, a more current gauge of the market, have since flattened, largely because mortgage rates rose throughout May. Since new listings are also flattening, home prices may continue to rise at their current pace.
“Buyers got a boost from lower mortgage rates in the spring, and that momentum is showing up in prices,” Redfin Senior Economist Sheharyar Bokhari said in the report. “And even though there are many more home sellers than buyers in the market, the most desirable homes are still attracting multiple offers, driving up prices. Buyers who are waiting for prices to fall may not get much relief; instead, they may consider expanding their search area or negotiating for concessions like mortgage rate buydowns or closing-cost credits from sellers.”
Home prices rose in 29 major metros month-over-month on a seasonally adjusted basis in May. The biggest uptick among the metropolitan areas Redfin analyzed was in Cleveland, where home prices rose 2.5 percent month-over-month.
Cleveland is followed by Providence, R.I. (1.8 percent), New York (1.8 percent), Miami (1.5 percent) and Columbus, Ohio (1.3 percent). Providence is one of just seven seller’s markets in the U.S., and Cleveland and New York are balanced markets; buyers are more likely to bid up prices in those places than in the 35 buyer’s markets.
Prices declined in 19 of the metros in this analysis, with the biggest drop in Riverside, Calif. (-1.9 percent). It’s followed by San Jose, Calif. (-1.7 percent), San Francisco (-1.3 percent), Phoenix (-1 percent) and Denver (-0.7 percent).
While San Francisco prices fell month-over-month, they’re soaring on a year-over-year basis, largely because of the AI boom. San Francisco home prices rose 11.7 percent year-over-year, the biggest increase in the U.S.
It’s followed by Chicago (10.7 percent), Newark, N.J. (10.2 percent), Milwaukee (9.8 percent) and Nassau County, N.Y. (9.8 percent).
The biggest year-over-year declines were in Austin, Texas (-3.8 percent), San Antonio (-2.4 percent), Dallas (-2.2 percent), Jacksonville, Fla. (-2.1 percent) and Orlando, Fla. (-2 percent).