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Home prices seem to have turned a corner. While they’re still down compared to a year ago, they’ve steadily climbed—at least month over month—since February. 

In fact, between February and May, home prices increased a full 4%, according to the CoreLogic S&P Case-Shiller Index released in July.

Will that trend continue, though? And what markets are seeing the most change in pricing? Here’s what the data tells us.

Where Home Prices Are Rising Most

From April to May, national home prices increased just 1.2%, but in some markets, the jump was much higher, especially in larger metro areas. In Cleveland, for example, prices increased 2.7% over April. Chicago and Detroit both saw 2.3% increases, while San Diego and New York were just under 2%. 

“Price gains have been strongest in Midwest pandemic-laggers—Cleveland, Chicago, Detroit—which are now the hottest housing markets,” says Selma Hepp, CoreLogic’s chief economist. 

She’s right: The turnaround for these cities has been notable. In Cleveland, the average monthly price increase was just 1.4% in pre-pandemic days, while Chicago and Detroit’s average jumps were even lower (Detroit’s monthly increase has actually quadrupled since then). 

Price appreciation this May compared to pre-pandemic averages during May (2015-2019, 2023) - CoreLogic
Price appreciation this May compared to pre-pandemic averages during May (2015-2019, 2023) – CoreLogic

To be clear: It’s not just these three markets seeing changes. All 20 of the biggest metros saw month-over-month price jumps in May. Other cities that saw bigger increases than the national average included Seattle, Minneapolis, Dallas, and Washington, D.C. Below is the list of all 20 markets and their YoY changes.

Year-over-year change in home prices (April 2023 - May 2023) - CoreLogic
Year-over-year change in home prices (April 2023 – May 2023) – CoreLogic

Some of these spots even experienced year-over-year increases—and significant ones, too. In Chicago, for instance, home prices have climbed 4.6% in the last year, and in Cleveland, it was nearly 4%.

Looking Ahead at Home Prices

It’s clear that prices are rising—and quite a bit in some parts of the country. The question is whether those price trends will continue as the year goes on. 

According to CoreLogic, they likely won’t. In fact, the monthly gains have slowed slightly since beginning in February, which could indicate those increases may plateau in the near future, the data firm reports.

“Elevated mortgage rates and high home prices are putting pressure on potential buyers,” Hepp says in a press release. “These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average.”

This leveling off seems even more likely as mortgage rates continue to surge. The current average rate on 30-year mortgage loans is now above 7%, according to Mortgage News Daily.

“The rest of 2023’s housing market activity will continue to depend on mortgage rates and the availability of for-sale homes, with neither likely improving for potential buyers in the near future,” Hepp says. “As a result, 2023 homebuying activity may end up being the slowest in about a decade.”

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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