Real house prices decreased 1.6 percent between January 2020 and February 2020, according to the latest First American Real House Price Index (RHPI).
On an annual basis, real house prices declined 5.8 percent between February 2019 and February 2020, the index found.
As a result, First American said consumer house-buying power (how much one can buy based on changes in income and interest rates) increased 2.5 percent between January 2020 and February 2020, and increased 14.6 percent year-over-year.
“As the coronavirus outbreak continues to affect the domestic and global economy, the housing market has shown that it is not immune to its impact. In March, the number of existing-home sales fell 8.5 percent relative to February, and the number of new listings continued to dwindle,” First American Chief Economist Mark Fleming said in a release.
“While mortgage rates have fallen due to the current economic uncertainty, stay-at-home orders have made it more difficult for potential home buyers to take advantage of the affordability boost, and first-time home buyers may have an even more difficult time as lenders have tightened credit availability,” Fleming said. “Despite all of the headwinds, homes continue to be bought and sold, but how will the changing dynamics of supply and demand impact house prices?”
The RHPI found that median household income has increased 2.7 percent since February 2019 and 60 percent since January 2000. First American said real house prices are 19.8 percent less expensive than in January 2000.
Unadjusted house prices now are 10.3 percent above the housing boom peak in 2006, but house-buying power-adjusted house prices remain 42.8 percent below their 2006 housing boom peak, according to the index.
During February the only state with a year-over-year increase in the RHPI was New Jersey (+1.5 percent). The five states with the greatest year-over-year decreases in the RHPI in February were Hawaii (-8.7 percent); New Mexico (-8.6 percent); Colorado (-8.5 percent); California (-8.2 percent); and Utah (-8 percent).
“As buyers and sellers pull back from the market and some sellers adjust their price expectations, it’s reasonable to expect a reduction in home sales and a moderation in house price appreciation in this year’s spring home-buying season,” Fleming said. “Yet, transactions will continue to occur. The housing market may be down, but it may be better positioned than many believe.”