US housing market valuation climbs to record $52 trillion as construction 'powerhouse' drives the surge

• The US housing market's total valuation has hit a record high $51.9 trillion, Zillow said.
• That's up by $2.6 trillion over the past year and nearly 50% more than what it was before the pandemic.
• Florida surpassed New York as the state with the second most valuable housing market.

The US housing market's total valuation is nearly 50% more than what it was before the pandemic, and that's not because of climbing home prices, according to Zillow.

Instead, new construction has pumped up the market, which saw its value expand by more than $2.6 trillion over the past year to a record high total of $51.9 trillion.

"While a small chunk of this growth can be attributed to a 1.3% rise in the average value of a US home over the past year, the powerhouse behind this surge has been new construction," Zillow said. "Builders have chipped away at the housing deficit as a steady flow of new homes have hit the market this spring and summer."

With mortgage rates hovering around the highest level in two decades, many homeowners have decided to stay put and stick to their low-interest home loans.

And for those who are willing to buy the few available homes in the current market, it's getting pricey. Last week, Zillow economists said that housing prices could increase by 5% in the next year.

But as the market for existing homes sees little new available inventory, builders have churned out new homes to tackle a housing shortage.

Builders have adapted to the current housing market, offering smaller homes with incentives like interest rate buydowns, where you initially pay a lower interest rate on your mortgage, then ramp up payments later. Now, sales of new homes are forecasted to make up a bigger chunk of all home sales, according to Zillow.

Housing trends are also shifting the leaders in the market. While New York ($4.2 billion), Los Angeles ($3.7 billion), San Francisco ($1.9 billion), and Boston ($1.3 billion) remain the top four cities, Miami ($1.3 billion) replaced Washington, DC, as the fifth most valuable metro.

In fact, Florida dethroned New York as the state with the second most valuable housing market, according to Zillow. The state has seen some of the biggest jumps in its real estate markets, with cities like Tampa, Miami and Jacksonville seeing over 80% growth in valuation.

A growing number of people relocating to Florida has increased competition for homes, heating up the state's real estate.

A separate Redfin report also highlighted that relocation trend, saying that a record 26% of homebuyers are looking to move to a different state. Cities in Florida like Orlando, North Port-Sarasota and Tampa are among the most popular destinations.