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The consumer price index rose 3.5% in March 2024, on an annual basis, according to the U.S. Bureau of Labor Statistics. That’s up from 3.2% in February.
Elevated housing inflation has kept CPI readings stubbornly high. Gasoline prices also edged up.
There are some bright spots, such as food prices, though. Household buying power is also up over the past year as wage growth has outstripped inflation.

Eric Thayer/Bloomberg via Getty Images

Inflation jumped in March as prices for consumer staples such as gasoline edged higher and those for housing remained stubbornly high, suggesting inflation may be a bit stickier than it seemed just a few months ago, economists said.
The consumer price index, a key inflation gauge, rose 3.5% in March from a year ago, the U.S. Labor Department reported Wednesday. That’s up from 3.2% in February.

CPI measures how fast prices are changing across the U.S. economy. It measures everything from fruits and vegetables to haircuts, concert tickets and household appliances.

The March inflation reading is down significantly from its 9.1% pandemic-era peak in 2022, which was the highest level since 1981. However, it remains above policymakers’ long-term target, around 2%.
Progress in the inflation fight has somewhat flatlined in recent months.
“The disinflation has stalled out,” said Mark Zandi, chief economist at Moody’s Analytics.
“The big rock in the way here is the cost of shelter,” Zandi said.

While housing costs have moderated, they account for the largest share of the CPI inflation index and “are still growing strongly,” he said.

Despite progress having stalled, broader evidence doesn’t suggest a renewed surge in inflation — though it may take longer than expected to bring the rate back to target, economists said. In fact, underlying inflation after stripping out shelter costs is already back to target, Zandi said.
“I still hold to the view that inflation is moderating,” Zandi said. “It’s just taking frustratingly long to get there.”

Household paychecks can buy more stuff, though

Higher oil and gas prices take a toll

Gasoline prices increased 1.7% from February to March, the Bureau of Labor Statistics said. This figure is adjusted to account for seasonal buying patterns.
Average U.S. pump prices were $3.52 a gallon on April 1, up from $3.35 on March 4, according to weekly data published by the Energy Information Administration.

The increase is largely attributable to higher oil prices. They’ve firmed amid a generally positive outlook for the global economy, meaning greater global oil demand, and controlled output among major oil-producing nations, meaning there hasn’t been a glut of oil, economists said.
Tensions in the Middle East may also be playing a role, Hamrick said.

Higher gas prices may filter through to higher prices elsewhere, since they factor into transportation and distribution costs for goods and even services such as food delivery, he said.
Higher energy prices are what worries Zandi most relative to inflation readings. It’s likely the upward trend will continue in coming months, and the dynamic negatively impacts consumer buying power and sentiment, he said.
“Nothing does more damage to the economy more quickly than rising oil and gasoline prices,” he said.

Other ‘notable’ areas of inflation

The BLS said that motor vehicle insurance, medical care, recreation and personal care, in addition to shelter, were “notable” contributors to “core” inflation, a reading that strips out volatile energy and food prices.
Shelter, motor vehicle insurance, medical care, apparel and personal care were notable contributors to monthly inflation from February to March, the agency said.

The overall monthly CPI reading, 0.4%, was much higher than the roughly 0.2% that would be expected on a consistent basis to bring inflation back to normal, economists said.
“There is no improvement here; we’re moving in the wrong direction,” Hamrick said.
“The usual trouble spots persist,” said Hamrick, who additionally called out costs for electricity and car maintenance and repairs.

Prices have fallen in some categories

Meanwhile, some consumer categories have seen improvement.
Prices fell for used cars and trucks, new vehicles and airline tickets between February and March, for example. They’re also down over the past year, by 2.2%, 0.1% and 7.1%, respectively, according to CPI data.
Lower prices for new and used cars should lead auto insurance and repair costs to fall as well, economists said.

Grocery prices are another bright spot, they said.
While some categories, such as eggs and pork chops, have seen recent upward movement, the overall “food at home” index stood at 0% on a monthly basis in both February and March.
“Food prices have come to a standstill,” Zandi said. “For most Americans, the thing that bothers them the most about inflation is high food prices.”

Supply-and-demand dynamics

At a high level, supply-and-demand imbalances are what trigger out-of-whack inflation.
For example, the Covid-19 pandemic disrupted supply chains for goods. Americans’ buying patterns also simultaneously shifted away from services — such as entertainment and travel — toward physical goods since they stayed at home more, driving up demand and fueling decades-high goods inflation.
Additionally, supply-and-demand dynamics in the labor market pushed wage growth to the highest level in decades, putting upward pressure on prices for services, which are more wage-sensitive.
Now that supply-chain issues are “pretty close to fixed,” there’s “little scope” for goods to contribute to disinflation moving forward, said Sarah House, senior economist at Wells Fargo Economics.

“You need services to take the mantle of disinflation,” because goods have “petered out,” she added.
Housing falls into the services category. It accounts for the largest share of the consumer price index, so disinflation in this category would likely have a large impact on inflation readings.
So far, housing inflation has remained stubbornly high — even as economists have predicted it would start moderating any day given broadly positive trends in prices for new tenant rental leases, for example.
“It seems to be taking a bit longer than people thought,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
“It’s coming,” he said. “It’s just a matter of when.” More

Since the start of 2024, higher-than-expected inflation data triggered caution from top Federal Reserve officials.
The Fed is determined not to reduce interest rates too soon, experts say — a mistake the central bank has made in the past.
“The real danger here is that the Fed loosens prematurely, which is exactly what they did in the late 1960s,” said Mark Higgins, author of “Investing in U.S. Financial History: Understanding the Past to Forecast the Future.”

The Federal Reserve is in no rush to lower its benchmark rate.
Earlier expectations that the central bank was planning multiple cuts before the end of the year seem less likely.

On the heels of Friday’s strong jobs report, Wednesday’s consumer price index increased at a faster-than-expected pace in March. Both suggest that inflation is staying stubbornly higher, which experts say is likely keeping the Fed on the sidelines.
Now markets are pricing in a less-than 20% chance of a rate cut in June, according to the CME’s FedWatch measure of futures market pricing, down from nearly 80% one month ago.
More from Personal Finance:Cash savers still have an opportunity to beat inflationShould you refinance your mortgage? Here’s what’s wrong with TikTok’s viral savings challenges
Since the start of 2024, higher-than-expected inflation data made top Fed officials less eager to ease policy. Chair Jerome Powell indicated last month that, with the economy still growing at a healthy pace and the unemployment rate below 4%, the Fed can take a more measured approach when it comes to cutting interest rates.
“We are prepared to maintain the current target range for the federal funds rate for longer if appropriate,” said Powell at a post-meeting news conference in March.

The risks of allowing inflation to persist still far outweighs the risk of triggering a recession.

Mark Higgins
author of “Investing in U.S. Financial History: Understanding the Past to Forecast the Future.”

“The risks of allowing inflation to persist still far outweighs the risk of triggering a recession,” Mark Higgins, senior vice president at Index Fund Advisors and author of “Investing in U.S. Financial History: Understanding the Past to Forecast the Future,” recently told CNBC.
“[The Fed’s] failure to do this in the late 1960s is one of the major factors that allowed inflation to become entrenched in the 1970s,” Higgins said.
This time around, the central bank is likely to remain extremely cautious, Higgins said, even if that means holding rates higher for longer.
“My gut is that they are aware of the risks and won’t ease too early,” he added.

The Fed’s ‘two major mistakes’

“The Fed has made two major mistakes in its history,” according to Higgins, and those two missteps still influence the central bank’s moves today.
“The first [mistake] was allowing the banking system to fail in the early 1930s, which caused the Great Depression to deepen significantly,” he said. “The second was the great inflation of the 1970s when inflationary pressures picked up and the Fed tightened but backed off prematurely, which is the risk the Fed faces now.”
While financial regulations and the creation of deposit insurance could prevent a widespread banking crisis from happening today, “the real danger here is that the Fed loosens prematurely, which is exactly what they did in the late 1960s,” Higgins said.

“Deep down, Powell is petrified of redoing Volcker again,” Steven Eisman, Neuberger Berman’s senior portfolio manager, said recently on CNBC’s “Squawk Box.”
The Fed has “engineered what looks to be a soft landing, inflation is coming down, the economy is still strong, why would you waste rate cuts now and risk a resurgence of inflation when really all you need to do is declare victory?” he said.
Even in prepared remarks last month, Powell referenced Volcker’s earlier interest rate policy as a reason policymakers don’t want to ease up too quickly now.
“Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to two percent,” Powell said.

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“Because rates shot up so much over the past few years, refinancing activity has mostly disappeared,” said Jeff Ostrowski, a housing analyst at Bankrate.
When the Federal Reserve starts cutting rates, here’s how to tell if refinancing is a smart move.

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It’s unclear when the Federal Reserve could begin cutting interest rates, but many homeowners who took out a mortgage in recent years — as rates hovered between 6% and 7%, and even touched 8% — are paying attention for opportunities to refinance.
Thanks to those high mortgage interest rates, refinance activity in 2023 was at the lowest level in 30 years.

In the first and second quarters of 2023 there was only $75 billion and $80 billion, respectively, in mortgage refinance originations nationally, according to Freddie Mac, a government-sponsored entity that buys mortgages from banks.
“Because rates shot up so much over the past few years, refinancing activity has mostly disappeared,” said Jeff Ostrowski, a housing analyst at Bankrate.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Refinancing activity rose 2.9% in February compared with last year, Freddie Mac found. However, fewer owners might refinance their loans as they might still be locked in on historically low rates or may see little incentive to do so, the mortgage buyer forecasts.
As homeowners wait to see when Fed rate cuts might materialize, and to what extent, here are three signs it may be smart to refinance:

1. You can cut your rate by 50 basis points or more

The right time to refinance your loan depends on when you bought your house, said Chen Zhao, a senior economist at Redfin, a real estate brokerage site.

It’s typically smart to wait for rates to go down by a full percentage point because it makes a significant difference in your mortgage, experts say.
Yet, once you start seeing rates decline by at least 50 basis points from your current rate, contact your lenders or loan officers and see if it makes sense to refinance, depending on factors including the costs, monthly savings and how long you plan to be in the home, Zhao said.
“There are costs associated with it, but the costs are low in comparison to the savings over the long term,” said Zhao.

While the outlook on Fed rate cuts continues to change, rates are unlikely to go much below 6% in the near term, Zhao said.
“We’re just in a much higher interest rate situation with the economy,” she said.
Don’t hold out for a super low rate like the ones consumers saw in the early stages of the Covid-19 pandemic.
“We’ve been so accustomed to mortgage rates as a baseline being at 2% or 3%,” said Veronica Fuentes, a certified financial planner at Northwestern Mutual. “That’s what we expect the norm to be, but that’s actually not the case.”

2. You can pay cash for closing costs

When you refinance, “it’s like doing a brand new loan all over again,” Ostrowski said.
That means you’ll incur closing costs, typically including an appraisal and title insurance.
The total cost will depend on your area or state.
The average closing cost for a refinanced single-family mortgage was $2,375 in 2021, up 3.8%, or $88, from $2,287 a year prior, according to CoreLogic’s ClosingCorp, a provider of residential real estate closing cost data.

Refinancing can make more financial sense if you are able to pay those upfront instead of rolling the expense into your new loan. Some lenders may require a higher interest rate if you finance closing costs, plus you’ll be paying interest on those expenses for the life of the mortgage.
“You have to be pretty mindful and have a good strategy for how much money you’re going to save and whether it makes sense,” Ostrowski said.

3. You bought your home with an FHA loan

If you bought your home with an FHA loan, you might have a reason to refinance. While such loans are a “great tool” for securing a home as a first-time buyer, there’s a required mortgage insurance premium, or MIP, that can be costly, said Ostrowski. Most new borrowers pay an annual MIP that is equivalent to 0.55% of their loan, according to government figures.
“If you got an FHA loan, it could make sense to refi for a rate that is only a little bit lower if you’re going to be able to knock out that mortgage insurance premium,” he said.
For example, on a $328,100 FHA mortgage, the owner would pay annual premiums at 0.55% rate for the life of the loan, equal to $150 monthly payments, according to calculations from Bankrate. More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

It is still uncertain when the Federal Reserve may cut rates and by how much.
But cash savers still have the best opportunity for returns than they’ve had in years.

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It may be a while longer before the Federal Reserve lowers interest rates, experts now say.
That means savers can still earn the best returns on their cash in years, following a “nuclear winter for the better part of the last 15 years,” said Greg McBride, chief financial analyst at Bankrate.

“We’ve now had two years in a row where both liquid savings and timed deposits like CDs [certificate of deposits] are paying yields that are well ahead of inflation,” McBride said.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

The Fed has largely been expected to start a series of interest rate cuts this year after hiking rates to combat historically high inflation.
But as the economy continues to perform well and inflation is still higher than the central bank’s 2% target, predictions for how much rates will come down and when have become less certain.
“Even though rates might start dropping a bit here or there, they’re still going to be relatively high,” said Ken Tumin, senior industry analyst at Lending Tree and founder of DepositAccounts.

‘It’s a good time to lock in’

Cash savers have a variety of options in which to invest that are beating inflation, according to McBride.

“It’s a good time to lock in,” McBride said, with CDs, Treasury bills and Treasury Inflation-Protected Securities, or TIPs, all paying high rates.
Series I bonds have become a better deal, though not as many people are paying attention to them, McBride said. When I bonds were at 9.6%, they were just reimbursing savers for inflation, with no after-inflation return. Now, however, they provide an after-inflation return of 1.3% in addition to reimbursing savers for inflation, for a total of 5.27% available through April 30.
To be sure, many of the mentioned investments require savers to stay put for a specified time period, and may require some funds to be forfeited if they are cashed in early.

Online savings accounts provide higher yields

Online high yield savings accounts provide more flexible terms for accessing cash and annual percentage yields more than 4%, in many cases.
Yet 67% of Americans are earning interest rates below that threshold, according to a recent Bankrate survey.
The two top reasons respondents cited for not moving their money included wanting access to their cash through their local bank branch and being comfortable with their current financial institution.
However, savers should keep in mind they don’t necessarily have to give up branch access or completely sever ties with their current bank or credit union if they set up an account that’s linked to their existing accounts, McBride said.
“You’re just going to send your savings somewhere where it’s going to be welcomed with open arms and higher yields,” McBride said.

Consider when you need the money

When choosing between locking in returns on cash or finding a better rate on a liquid savings account, the timing of your goals should be your priority.
“The fundamental determinant is, ‘When do you need the money?'” McBride said.

Ask yourself whether you need to have access to your cash at a moment’s notice or whether you can afford to lock it up for multiple years, he said.
For investors who have ample cash, it may make sense to break up deposits among online savings accounts, short-term CDs, and even long-term CDs or Treasury notes, according to Tumin.
“No one really knows where interest rates are going to fall,” Tumin said. “So you can try to kind of hedge your bets.”
However, for savers without much savings, a high yield online savings account still makes the most sense, he said. All savers — regardless of deposit size — should make sure their deposits are insured by the Federal Deposit Insurance Corp.

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First-time homeowners often face sticker shock on their mortgage payments after the first year of ownership. 
“All counties reassess a property’s taxes — it depends on when,” said Melissa Cohn, regional vice president at William Raveis Mortgage. While some places may differ on frequency, “if it’s new construction, they always reassess.”

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It’s not unusual for new homeowners to face financial surprises, but people buying a newly built home may be more likely to encounter sticker shock on a key expense.
Almost 75% of recent homebuyers had regrets about their purchase, according to a 2023 survey from Real Estate Witch. Property taxes were the most common gripe, surprising 33% of new owners.

With new builds, property taxes can change dramatically after purchase because initial rates are often based on estimates. That can be jarring for homeowners who already stretched their budgets to afford a home in the current market.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Newly built homes comprise 30% of the current market, up from the typical 10% to 20%, according to a recent report by the National Association of Realtors. As more buyers turn to builders, potential owners need to be aware of how costs might increase after even just a year, experts say.

“Buyers need to understand that real estate taxes … are not static. They can change on an annual basis,” said Melissa Cohn, regional vice president at William Raveis Mortgage. “People don’t really have any control.”

Why property taxes can jump for new builds

When lenders qualify someone for a home purchase, they factor in the principal, the interest payment on the mortgage, homeowner’s insurance and property taxes.
But unlike previously owned homes, new builds lack a tax bill because there’s no house to assess yet, experts say. Instead, mortgage lenders will often use an older tax rate from the area or an estimated tax rate to calculate the owner’s monthly payment.

The calculation is going to vary by lender, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. Some take 1% to 2% of the sales price of the home for the property taxes, while others multiply one-third of the sales price by the local tax rate to determine estimated taxes.

Initially, the homeowner will typically pay the estimated property tax rate into escrow. Depending on the local tax assessment cycle, the county office will eventually assess the value of the new house to determine the actual property tax rate.
“All counties reassess a property’s taxes — it depends on when,” Cohn said.
While some places may differ on frequency, “if it’s new construction, they always reassess,” she explained.
And at that point, if the homeowner has an escrow account, they may learn they have a shortage, meaning they owe more property taxes than expected.
If the homeowner cannot pay the owed taxes in a lump sum, the lender usually pays what’s owed. In that case, the owner pays back the lender through an increased mortgage payment to make up the difference. 

Tricks to gauge how property tax may change

“People who buy today with the assumption that they qualify based on the current real estate taxes or current insurance need to really do more homework to understand where they could really be in a year,” Cohn said.
If you’re looking to buy in an area you’re unfamiliar with, find out how often the county reassesses property taxes and what the reassessment formula is based on, Cohn said.

Additionally, you may want to consult with a local loan officer who understands the landscape of the area you’re buying into, Nevins said.
If some newly built homes in your neighborhood with similar square footage have been around for a year, you could check the property address on a real estate site and get a ballpark estimate of what your taxes might be, said Veronica Fuentes, a certified financial planner at Northwestern Mutual.
However, tread with caution: When you look at real estate taxes listed online, those are the taxes the current owner pays, not what you will pay, Cohn said.
Correction: This story has been updated to reflect that some lenders estimate initial property tax rates for new builds based on one-third of the sales price multiplied by the local tax rate. An earlier version of this story misstated that formula. More

President Joe Biden on Monday unveiled a new student loan forgiveness plan that could provide up to $20,000 in interest relief and debt cancellation for certain groups.
While forgiveness before 2026 won’t trigger a federal tax bill, borrowers could owe taxes on future debt cancellation, experts say.

US President Joe Biden speaks about student loan relief at Madison College in Madison, Wisconsin, on April 8, 2024. 
Andrew Caballero-reynolds | AFP | Getty Images

Tax treatment of student loan forgiveness

Student loan forgiveness is federally tax-free through 2025 — thanks to a provision from the American Rescue Plan Act of 2021. Biden wants to make that policy permanent, according to his 2025 fiscal year budget. But the future taxability of student loan forgiveness is unclear.
If Biden’s new plan is finalized as proposed and borrowers receive cancellation before 2026, the forgiven balance won’t incur federal taxes.
However, some borrowers could still see a state tax bill, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

Many states have conformed to federal rules on the taxability of student loan forgiveness. But borrowers shouldn’t assume there won’t be state liability, he said.
“You need to take that into account and understand what your state is going to do,” Lucas added.

Borrowers could owe taxes after 2025

If you’re slated to receive student loan forgiveness under an income-driven repayment plan after 2025, that’s not automatically tax-free, explained CFP Ethan Miller, founder of Planning for Progress in the Washington, D.C., area.
Biden’s proposal to cancel student loan interest could reduce balances. But if tax-free forgiveness isn’t extended, “some borrowers are potentially facing a pretty large tax bill down the line,” said Miller, who specializes in student loans.
For example, if you received $50,000 in forgiveness after 2025, and you’re in the 22% tax bracket, your federal tax liability could be $11,000.

Plus, federal income tax brackets are scheduled to rise after 2025 due to an expiring provision from the Tax Cuts and Jobs Act of 2017.
After 2025, the individual tax brackets will revert to 10%, 15%, 25%, 28%, 33%, 35% and 39.6%, which “could be a double whammy for some people,” Miller said. 
Depending on your situation, higher income from taxable student loan forgiveness could cause “a chain of [tax] consequences,” such as phaseouts for other tax breaks, Lucas said.

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TikTok has become one of the most popular sources for financial tips and advice, particularly among Generation Z.
“Cash stuffing,” the “100 envelope” method and the “no-spend” challenge are a few of the latest money saving trends going viral.
Rather than hop on the newest fad, which may be hard to sustain in the long run, establishing a routine is necessary for building wealth, experts say.

If you’re having money problems, someone on TikTok has a solution.
Between “cash stuffing,” the “100 envelope” method or the “no-spend” challenge, there’s no shortage of suggestions to better your financial standing.

“The gamification can be kind of fun,” said Ted Rossman, senior industry analyst at Bankrate. But like any other quick fix, these can be hard to maintain over time, he added.

How these savings challenges work

The “100 envelope” method suggests saving a dollar more each day for 100 days. On the first day you’ll set aside $1, then $2 the next day and so on, so by the end of the 100-day period, you will have more than $5,000 set aside.
The approach has proved so popular, there are now more than 1,000 specifically designed kits, trackers and binders dedicated to this money-savings trend for sale on Amazon.
More from Personal Finance:’Loud budgeting’ is having a moment Nearly half of young adults have ‘money dysmorphia’What to know before taking advice from TikTok
More young adults are also trying another envelope method, or “cash stuffing,” to stay on budget and out of debt.

The premise is simple: Spending money is divided up into envelopes representing your monthly expenses, such as groceries and gas. When the cash in one envelope is spent, you’re either done spending in that category for that month, or you need to borrow from another envelope.
Alternatively, the “no-spend” challenge advocates eliminating all nonessential purchases altogether for a week, a month or even a full year, and putting the money that would go otherwise go to Starbucks coffees, dinners out and new clothes toward a long-term financial goal.

‘Walk before you run’

“I would definitely stress walking before you run,” Rossman said.
Rather than hop on the latest extreme fad, which may be hard to sustain, “it comes back to setting a budget and setting expectations,” he said.
Budgeting can help to balance immediate, short-term and long-term needs, data from The Pew Charitable Trusts found, and automatic savings can reduce the effort required to rebuild savings.
Rossman advises having money regularly transferred from your paycheck to a savings account. “You’re less likely to miss what you don’t see,” he said.

Establishing such a routine is necessary for building wealth, other experts also say.
There’s no secret to successful money habits, added Matt Schulz, chief credit analyst at LendingTree and author of “Ask Questions, Save Money, Make More.”
“With diets or with money, sometimes these fads catch fire, but the truth is that success with eating healthy or saving money is just about doing the same boring things consistently over and over again over time,” Schulz said.
“It may not make for great TikTok content, but it really is the wisest way to go about doing things,” he added.

A better way to save

TikTok’s latest savings trends seem like a good idea “with a relatively low ceiling,” Schulz said, however, “if there’s ever been a time when you shouldn’t stick your money in a binder, it’s today when you can get 4% to 5% or more back in these high yield savings accounts.”
After a series of interest rate hikes from the Federal Reserve, some top-yielding online savings account rates are now paying even more than 5%, according to Bankrate.com — well above the rate of inflation.
For example, if you have $5,000 in a high-yield savings account earning 5%, you’ll make roughly $250 in interest in a year.

Other downsides of keeping cash

Stashing cash not only forfeits the best returns in decades, it also leave you vulnerable to theft and could forgo the protections that come with consumer banking.
Whether and to what extent you are covered in case of a burglary may depend on your home insurance policy, whereas banks are covered by the FDIC, which insures your money for up to $250,000 per depositor, per account ownership category.

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The U.S. had 550 “million-dollar” cities, or areas where the typical home is worth more than $1 million, in February, according to a new analysis by Zillow.
The boost in high-value areas is a reflection of tight supply and high demand, according to Skylar Olsen, chief economist at Zillow.
Naples, Florida, boasts the most expensive home for sale in the U.S., which hit the market in February for $295 million.

Jon Lovette | Stone | Getty Images

There is a record number of areas in the U.S. where the “typical” home is worth $1 million or more.
In February, the country had 550 “million-dollar” cities, or areas where the “typical” home value is $1 million or more, according to a new analysis by Zillow. That is a gain of 59 cities from 2023, and edges out the previous record of 522 such cities when home values peaked in 2022.

The boost in million-dollar cities is a result of the mortgage lock-in effect, which deterred homeowners with extremely low rates from listing their properties for sale, said Skylar Olsen, chief economist at Zillow. The dynamic is keeping supply limited in some markets and elevating sale prices for those few available properties.

Some places have lost ‘million-dollar city’ status

California has the most million-dollar cities, with 210. That is 12 more than a year ago and more than the next five runner-up states — New York, New Jersey, Florida, Massachusetts and Colorado — combined, Zillow found.

Even though there are more million-dollar cities this year, the record amount is connected to how the lock-in effect is affecting an area’s supply, according to Olsen.
“The seller is as sensitive to the interest rate [as buyers],” she said.
Meanwhile, some areas lost the “million-dollar” status. In places where many homeowners already had interest rates between 6% and 7%, the lock-in effect is not as strong.
Such places are seeing an increase in supply with more sellers willing to put homes on the market, Olsen said.
“In those places where we’ve lost million-dollar cities … they’re not as locked in, and they have a lot more of that new construction that helps that picture, too,” she said.

Florida lost three million-dollar cities — Siesta Key, Santa Rosa Beach and Sanibel — while Texas lost Sunset Valley and Volente, two areas near Austin.
But it is hard to say if that is a trend, Channel said. Florida and Texas are both states that are still homes to high-cost, luxury markets, with 32 and 14 million-dollar cities, respectively, in February, per Zillow data.
Naples, Florida, also boasts the most expensive home for sale in the U.S., which hit the market in February for $295 million.

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