Real house prices decreased 0.4 percent between January 2019 and February 2019, and nearly 3 percent year-over-year, according to the latest First American Real House Price Index (RHPI).
According to the index, consumer house-buying power (how much one can buy based on changes in income and interest rates) increased 1 percent between January and February 2019, and increased 2.4 percent year-over-year.
“While household income rose steadily in 2018, rising mortgage rates offset any affordability benefit for home buyers, as illustrated by 11.1 percent year-over-year growth in the RHPI,” First American Chief Economist Mark Fleming said in a release. “However, the first quarter of 2019 has been friendly to potential home buyers, as declining mortgage rates, ongoing household income growth and moderating unadjusted home prices has boosted affordability.”
The RHPI found average household income has increased 2.8 percent since February 2018 and 55 percent since January 2000. Real house prices are 14 percent less expensive than in January 2000.
First American said six cities saw year-over-year declines in the RHPI. Those cities were San Jose, Calif. (-5.5 percent); Seattle (-4.5 percent); San Francisco (-2.1 percent); Los Angeles (-1.6 percent); Portland, Ore. (-1.1 percent); and San Diego (-0.3 percent).
“These coastal markets all have something in common: they were the tightest and hottest markets of 2018,” Fleming said. “In the first half of 2018, rising millennial demand amid a backdrop of limited inventory and increasing mortgage rates put pressure on affordability, causing buyers to take a step back. But now, affordability is on the rise and the main reason is rising inventory.
“According to First American calculations of Realtor.com February 2019 data, the number of listings in San Jose, Seattle and San Francisco increased 124 percent, 89 percent and 52 percent respectively compared with one year ago,” Fleming said. “As inventory enters the market, buyers have more options, bidding wars are less likely, and sellers are more likely to reduce list prices. In fact, these three markets experienced the greatest yearly growth in the number of listings with price reductions.”
The five states with the greatest year-over-year increase in the RHPI were New Hampshire (+8.1 percent); Wisconsin (+7.8 percent); Rhode Island (+6.5 percent); Ohio (+6 percent); and Georgia (+6 percent).
The five states with the greatest year-over-year decrease in the RHPI were Wyoming (-6.2 percent); Louisiana (-2.4 percent); Alabama (-2 percent); Oklahoma (-1.5 percent); and North Dakota (-1.5 percent).