San Diego ends the year No. 5 in nation for home price gains. Will it last?

San Diego home prices rose at the end of the year to rank among the top home markets in the nation.

In December, the San Diego metropolitan area’s home price increased 5.51% annually, said the S&P Case-Shiller Indices report released Tuesday. The highest gains in the 20-city index were in the New York metro area, at 7.22%, and Chicago, at 6.6%

San Diego metro, which includes all of San Diego County, had been falling in the index — hitting ninth in the previous month — before rising to No.5 in December.

Home prices rose nationally in December with analysts saying the competition for lack of homes for sale being the biggest factor.

“The sky-high growth in the S&P CoreLogic Case-Shiller National Home Price Index is gliding down to earth, but insufficient for-sale inventory is like a parachute slowing the descent,” said Kwame Donaldson, senior economist at Zillow.

The Case-Shiller Indices track repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median resale single-family home price in San Diego County was $992,000 in December, said Redfin.

The index is delayed by several months and several analysts said most markets were experiencing price depreciation to start this year.

“It is expected that we will see slower price growth in early 2025 as inventory increases and affordability continues to be a constraint,” said Lisa Sturtevant, chief economist at Bright MLS.

She said it is possible some markets, such as Washington, D.C., will be affected by federal job cuts by the Trump administration sweeping across the workforce. Sturtevant said the number of homes for sale in the nation’s capital were already increasing this month, so it’s possible that might lead to lower prices.

An estimated 64,469 civilian federal employees were based in the San Diego County’s five congressional districts in 2023, according to a December 2024 report by the Congressional Research Service.

In most markets, home price gains were much higher to start the year. In January 2024, San Diego County home prices were up 11.2% annually — double the 5.51% gain to end the year.

Even if home inventory increases in San Diego, and other markets, experts cautioned still-high home prices and mortgage rates would make things difficult for first-time buyers.

At the end of December, the average interest rate for a 30-year, fixed-rate mortgage was 6.85%, according to Freddie Mac. It hit 7.04% in mid-January, its highest point since July.

“Lower mortgage rates are not likely going to be achieved in the short term,” wrote Hanna Jones, Realtor.com‘s senior economic research analyst, “meaning affordability challenges are likely to persist in the coming months.”

San Diego metro had the biggest price gains in California. Coming in at No.10 was Los Angeles-Orange counties at 3.57%, and San Francisco at No.15 with a 2.61% gain.

Tampa was the only metro area to be down year-over-year with a drop of 1.11%. Other sluggish markets included Denver, up 1.51%, and Dallas, up 1.61%.

Annual price growth by metropolitan area

S&P/Case-Shiller Home Price Index, December 2024

New York: 7.22%Chicago: 6.60%Boston: 6.35%Seattle: 5.61%Washington, D.C.: 5.55%San Diego: 5.51%Las Vegas: 5.43%Cleveland: 5.24%Detroit: 4.76%Los Angeles-Orange counties: 3.57%Charlotte: 3.47%Miami: 3.28%Minneapolis: 3.20%Portland: 2.92%San Francisco: 2.61%Atlanta: 2.35%Phoenix: 2.09%Dallas: 1.61%Denver: 1.51%Tampa: -1.11%

National: 3.92%