Total new-home closings: 3,483 
Population: 4,594,060

The good: The start of 2015 signaled improvements to a market that previously raised red flags for weak demand. 
The bad: New-home prices were forced upward in early 2015 by increased construction and land costs.
The bottom line: Even with higher new-home prices, the market shows signs of increased demand.

From third quarter 2012 through the first quarter of 2014, quarterly starts significantly outpaced closings, placing a fog of inventory over San Francisco and raising a red flag for too little demand. But beneath that fog, builders showed a shift in their pricing schemes in the first quarter of 2014, with prices among new-home starts shifting significantly to above $700,000, partly to offset increases in construction and land costs. Come February 2015, those numbers increased yet again, climbing year over year to $809,376 per unit, 5.9% higher than a year earlier. Even with those adjustments, 2014 ended strong in new-home closings, then followed with a 27.8% year-over-year hike in January 2015. In March, unemployment decreased year over year from 5.5% to 4.3%, and year-to-date single-family permits rose year over year by 24%—both indicating that this city can stand higher prices.