Real house prices decreased 0.9 percent between March 2019 and April 2019, according to the latest First American Real House Price Index (RHPI).
Year-over-year, real house prices declined 0.72 percent between April 2018 and April 2019, First American said. 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 March 2019 and April 2019, and increased 6.7 percent from April 2018.
“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 percent compared to April 2018,” First American Chief Economist Mark Fleming said. “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,” Fleming said. “Only nominal house price appreciation, which began to pick up the pace in April, dampened affordability.”
During April, affordability improved month-over-month in 43 of the 44 markets First American tracks. The five markets with the highest year-over-year growth in affordability in April were San Jose, Calif.; Seattle; Portland, Ore.; San Francisco; and Los Angeles, according to the index.
“Declining mortgage rates increase affordability equally in each market as mortgage rates are generally the same across the country. However, household income growth and nominal house prices vary by market, so the affordability dynamic varies as well,” Fleming said “In fact, one reason why these markets have seen such strong gains in affordability is because household income growth was so strong. In the top four markets, household income growth exceeded house price growth. That’s an affordability boost even without the help of falling rates.”
The five states with the greatest year-over-year increases in the RHPI in April were Wisconsin (+4.7 percent); Rhode Island (+4.3 percent); New Hampshire (+3.5 percent); Georgia (+2.8 percent); and Ohio (+2.4 percent).
The five states with the greatest year-over-year decreases in the RHPI in April were North Dakota (-7.4 percent); Wyoming (-6.6 percent); Louisiana (-4.3 percent); Vermont (-3.9 percent); and Oklahoma (-3.6 percent).