Real house prices increased 2.9 percent between January 2018 and February 2018, according to the First American Real House Price Index (RHPI).Year-over-year, real house prices increased 5.1 percent.
The RHPI found that consumer house-buying power declined 2.6 percent between January 2018 and February 2018, and increased 0.8 percent year-over-year. Real house prices are 33.7 percent below their housing boom peak in July 2006 and 10.9 percent below the level of prices in January 2000.
“Last week, the average 30-year, fixed-rate mortgage rose 5 basis points to 4.46 percent, reaching its highest level since January of 2014. The consensus among economists is that the 30-year, fixed-rate mortgage will approach 5 percent by the end of this year,” First American Chief Economist Mark Fleming said in a release.
“All else held equal, this will make housing more expensive. However, some perspective is important. The historical average for the 30-year, fixed-rate mortgage is about 8 percent so, even with the expected increase, mortgage rates will still be low by historical standards,” Fleming added.
Unadjusted house prices increased by 5.9 percent in February on a year-over-year basis and are 8 percent above the housing boom peak in 2007, the RHPI found.
“The primary reason mortgage rates are rising is a healthy and growing economy. Income levels are growing in many markets, which helps offset rising interest rates,” Fleming said. “Nationally, house-buying power, how much one can buy based on changes in income and interest rates, has increased by 0.8 percent in the past year. However, some markets have seen faster income growth and subsequently greater increases in house-buying power.”
The states with the greatest year-over-year increase in the RHPI were Nevada (+11.7 percent); New York (+11.3 percent); Kentucky (+10.5 percent); New Hampshire (+10.5 percent); and Missouri (+10.2 percent).
The states with the greatest year-over-year decrease in the RHPI were Washington, D.C. (-1.7 percent); Maryland (-1.1 percent); New Jersey (-0.9 percent); Vermont (+0.0 percent); and Arkansas (+0.0 percent).