Consumer house-buying power increased between November and December, but remained below what it was one year ago, according to the First American Real House Price Index (RHPI).
Between November 2018 and December 2018, Real house prices decreased 2.4 percent, the index found. Year-over-year, real house prices increased 11.8 percent.
First American said those numbers translated into consumer house-buying power increasing 3.1 percent between November 2018 and December 2018, and declining 5 percent year-over-year.
“While housing affordability in 2018 fared poorly in comparison to 2017, the year finished strong in December thanks to declining mortgage rates,” First American Chief Economist Mark Fleming said in a release. “Mortgage rates in December fell 0.23 percentage points compared with the previous month and household income increased 0.4 percent.
“The effect? A 3.1 percent increase in house-buying power, the largest monthly gain in more than five years,” Fleming added. “As a result, real house prices experienced the largest monthly decline since 2016. December delivered a significant holiday housing affordability boost to prospective home buyers.”
According to the index, unadjusted house prices are now 2 percent above the housing boom peak in 2006, but house-buying power-adjusted house prices remain 37.2 percent below their 2006 housing boom peak.
First American said the five states or districts with the greatest year-over-year increase in the RHPI in December were the District of Columbia (+19.1 percent); Ohio (+17 percent); Montana (+16.7 percent); Nevada (+16.6 percent); and New Jersey (+16.4 percent). No state or metropolitan area had a year-over-year decrease in the RHPI in December.
The index found the metropolitan areas with the greatest year-over-year increase in the RHPI in December were Cleveland (+20.1 percent); Las Vegas (+19.9 percent); Orlando, Fla. (+19.8 percent); Charlotte, N.C. (+19.5 percent); and Columbus, Ohio (+18.2 percent).