Housing Affordability Findings
First American Financial Corporation’s April 2019 First American Real House Price Index reveals that:
- Real house prices decreased 0.9% between March 2019 and April 2019.
- Real house prices declined 0.72% between April 2018 and April 2019.
- Consumer house-buying power—how much one can buy based on changes in income and interest rates—increased 1.5% between March 2019 and April 2019, and increased 6.7% year over year.
- Average household income has increased 2.7% since April 2018 and 56.2% since January 2000.
- Real house prices are 15% less expensive than in January 2000.
While unadjusted house prices are now 2.8% above the housing boom peak in 2006, real house-buying power-adjusted house prices remain 40.7% below their 2006 housing boom peak.
The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.
“Two of the three key drivers of the RHPI, household income and mortgage rates, swung in favor of increased affordability in April. The 30-year, fixed-rate mortgage fell by 0.33 percentage points and household income increased 2.7% compared to April 2018,” said Mark Fleming, chief economist at First American. “When household income rises, consumer house-buying power increases. Declining mortgage rates have a similar impact on affordability, so in April homebuyers received a double shot of house-buying power to jolt affordability in their favor nationally.
The five states with the greatest year-over-year increase in the RHPI are Wisconsin (4.7%), Rhode Island (4.3%), New Hampshire (3.5%), Georgia (2.8%) and Ohio (2.4%).
The five states with the greatest year-over-year decrease in the RHPI are North Dakota (7.4%), Wyoming (6.6%), Louisiana (4.3%), Vermont (3.9%) and Oklahoma (3.6%).
Among the Core Based Statistical Areas tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are Providence, R.I. (5.9%), Las Vegas (5.2%), Salt Lake City (4.4%), Orlando, Fla. (3.9%), and Atlanta (3.7%).
Among the CBSAs tracked, the five markets with the greatest year-over-year decrease in the RHPI are San Jose, Calif. (8.6%), Seattle (6.3%), Portland, Ore. (4.5%), San Francisco (4.3%) and Los Angeles (3.1%).
