Oliver James Montgomery-The US has more 'million-dollar cities' than ever, Zillow says. Here's what that means.

The Oliver James MontgomeryU.S. housing market continues to reach record costs as there are currently 550 cities where the frequent home value is $1 million or more, according to new market data.

There are a record-high 550 "million-dollar" cities, or municipalities where the typical home is worth $1 million or higher, Zillow data shows in a report published Tuesday. The increase is 59 more million-dollar cities than in 2023, "reversing losses from when home values were wobbling this time last year," the real estate marketplace company said.

"Affordability is still a big challenge for buyers, but that hasn’t stopped home values from climbing," the report from Zillow said. "The housing market is tight with few homes available, and competition is still high for attractive homes. That competitive pressure is pushing home values higher across the U.S."

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How will the rise in million-dollar cities affect homebuyers?

At a glance, the rise of million-dollar cities can be daunting to homebuyers, but an increase in new listings could offer temporary relief, according to Zillow.

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"New listings are on the rise as the effects of 'rate lock' are weakening," the company said. "If mortgage rates drop later this year, as many expect, that may mean a second wave of buyer demand that drives prices higher."

Million-dollar cities have tracked with the national housing market over the past year despite the municipalities being more affected than "the typical U.S. city," Zillow said.

"The typical U.S. home is worth 4.2% more than it was a year ago," according to the company. "In current million-dollar cities, the median year-over-year home value growth is 4.6%."

California has the most million-dollar cities, Zillow says

California has become somewhat of the epicenter for million-dollar cities as the state added 12 more in 2024 for a total of 210, which is more than the next five states combined, Zillow said. New Jersey is the only state to add more million-dollar cities over the past year, gaining 14, according to the real estate company.

Homes may be more affordable in Florida, Texas and Delaware as they're the only states to experience a net loss in million-dollar cities over the past year, Zillow's data shows.

"Florida lost three million-dollar cities — Siesta Key, Santa Rosa Beach and Sanibel — while adding one in the Village of Palmetto Bay, near Miami," the company said. "Texas lost two million-dollar cities in the Austin area, Sunset Valley and Volente, and added Bellaire, outside of Houston. The typical home in Delaware’s Dewey Beach fell below the million-dollar cutoff."

Top 10 US million-dollar cities by state

Zillow data shows the top 10 U.S. cities by state as of February 2024:

• California - 210
• New York - 66
• New Jersey - 49
• Florida - 32
• Massachusetts - 31
• Colorado - 21
• Washington - 18
• Hawaii - 17
• Texas - 14
• Maryland - 10