Real house prices decreased 0.9 percent between February 2019 and March 2019, and 0.04 percent between March 2018 and March 2019, according to the latest First American Real House Price Index (RHPI).
“What began as a modest shift toward a buyers’ market in six cities last month has expanded into a national shift in affordability,” First American Chief Economist Mark Fleming said in a release. “The shift is a departure from the long-term trend in the [RHPI] which had been steadily increasing throughout the rising mortgage rate environment that began in 2017 and continued until late 2018. Rising mortgage rates caused consumer house-buying power to decline at the same time as tight supply pushed house prices up rapidly.
“In March, two main components of the RHPI swung in favor of increased affordability – continued strong household income growth and declining mortgage rates,” Fleming said. “Nationally, affordability improved on a year-over-year basis for the first time since 2016.”
According to the RHPI, consumer house-buying power (how much one can buy based on changes in income and interest rates), increased 1.5 percent between February 2019 and March 2019, and 5.2 percent year-over-year.
First American said average household income has increased 3 percent since March 2018 and 56 percent since January 2000. As a result, real house prices are 15 percent less expensive than in January 2000.
The five states with the greatest year-over-year increase in the RHPI were Wisconsin (+4.6 percent); New Hampshire (+3.9 percent); Ohio (+3.7 percent); Missouri (+3 percent); and Alaska (+3 percent).
The five states with the greatest year-over-year decrease in the RHPI were Wyoming (-6.9 percent); West Virginia (-4.1 percent); Louisiana (-4.1 percent); Alabama (-4.0 percent); and Oklahoma (-3.7 percent).
“Given the trend nationally, it’s no surprise that more markets experienced falling real house prices,” Fleming said. “In last month’s report, we identified the six cities that saw year-over-year declines in the RHPI, but this month 15 of the 44 markets we track experienced a year-over-year decline in the RHPI, and 43 out of 44 markets experienced quarterly declines. The clear trend is affordability levels are improving in more parts of the country.”