Real house prices increased 1.1 percent between February and March of this year, according to the latest First American Real House Price Index (RHPI).
The RHPI found real house prices declined 4.7 percent between March 2019 and March 2020.
Consumer house-buying power (how much one can buy based on changes in income and interest rates) decreased 0.1 percent between February 2020 and March 2020, and increased 12.5 percent year-over-year.
“In March, data began to reveal the depth of the impact from the pandemic on the housing market. 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 historically low mortgage rates make it more affordable for those with stable incomes to buy a home, tightening credit standards make it more difficult for some to obtain financing and many homebuyers struggle to find the home they want due the limited inventory of homes for sale,” Fleming said.
According to the index, real house prices are 18.4 percent less expensive than in January 2000; and house-buying power-adjusted house prices remain 42.1 percent below their 2006 housing boom peak.
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the pandemic,” Fleming said. “Yet, there are several key differences between ‘then’ and ‘now,’ – one of which is that housing was overvalued on the eve of the Great Recession, but today house-buying power nationally is nearly double the median sale price of a home. However, as the adage goes, it’s all about ‘location, location, location’ so let’s examine the extent of housing overvaluation at the market level.”
During March, the only state with a year-over-year increase in the RHPI was Rhode Island (+0.2 percent). The five states with the greatest year-over-year decreases in the RHPI were Hawaii (-9.5 percent); California (-8.7 percent); New Mexico (-8.7 percent); Illinois (-8.4 percent); and Utah (-7.8 percent).