After experiencing a temporary hiccup between July 2022 to January 2023, the U.S. housing market is back on track, stronger than ever, with a total estimated value of $52 trillion, according to a new analysis by Orphe Divounguy, a senior economist at Zillow Group.

Over the past year, the value of the U.S. housing market has surged by more than $2.6 trillion. Fueling this increase is new construction, according to Divounguy, even though the 1.3% rise in the average value of U.S. homes over the year also played a small role.

A steady flow of new homes have hit the market this spring and summer, as homebuilders worked diligently to remedy the housing inventory shortage.

Divounguy added that new home sales should make up a bigger piece of the home sales pie moving forward. In August, of the total home inventory, including both new and resale homes, newly built homes represented an elevated share of 31% of those available for sale, according to the National Association of Home Builders (NAHB). Additionally, nearly 16% of total home sales in August were new homes.

At the same time, builders also adapted to the needs of today’s home buyers who are navigating higher mortgage rates. As more first-time homebuyers are turning to new construction, builders offer  smaller, more-affordable homes as well as incentives like interest rate buydowns to tempt buyers off of the fence.

“Builders have been adjusting to the shifting market by lowering prices, and also by offering concessions, upgrades, and relatively more attractive builder financing,” Bright MLS Chief Economist Lisa Sturtevant said on Tuesday regarding new home sales. “When they can, homebuilders are also responding to the very strong demand for starter homes and homes for first-time buyers by building smaller homes on smaller lots. Part of the price drop has been a shift to sales of smaller, less expensive homes.”

However, higher interest rates are also increasing the cost of financing for builders and developer loans, adding another challenge for building, Alicia Huey, chairman of the NAHB, noted in a statement on Tuesday.

Florida housing markets are booming

The four most valuable metro areas have remained largely unchanged over the past five years: New York, Los Angeles, San Francisco and Boston. This year, Miami has claimed the fifth spot, jumping all the way from ninth as recently as May 2021. In doing so, it pushed Washington, D.C., out of the top five.

Of the six markets where housing has gained the most value since the start of the pandemic, four are in Florida: Tampa (+88.9%), Miami (+86.6%), Jacksonville (+82.4%) and Orlando (+72.3%), Divounguy noted. As a result, Florida has surpassed New York as the state with the second most valuable housing market.

California remains number one with more than $10 trillion of value in its housing market, nearly 20% of the national total. Texas and New Jersey round out the top five.