Real house prices decreased 0.8 percent between June 2020 and July 2020, according to the latest First American Real House Price Index (RHPI).
First American said real house prices declined 6.6 percent between July 2019 and July 2020. As a result, consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 2.2 percent between June 2020 and July 2020, and increased 15.8 percent year-over-year.
“Affordability improved in July as two of the three key drivers of the Real House Price Index, household income and mortgage rates, swung in favor of increased affordability, outpacing the rise in nominal house price appreciation,” First American Chief Economist Mark Fleming said in a release. “The average 30-year, fixed mortgage rate fell by 0.75 percentage points and household income increased 5.5 percent compared with July 2019.”
“Declining mortgage rates and rising household income levels both increase consumer house-buying power,” Fleming added. “So, even though nominal house price appreciation jumped 8.2 percent annually in July, it was not enough to offset the affordability boost from declining rates and rising household income.”
According to the RHPI, the only state with a year-over-year increase in the RHPI was Wyoming (+1.5 percent). The five states with the greatest year-over-year decreases in the RHPI were Massachusetts (-11.4 percent); New Hampshire (11 percent); Nevada (-10.5 percent); Maryland (-9.5 percent); and California (-9.4 percent).
First American said the five markets with the greatest year-over-year increases in the RHPI were Pittsburgh (+4.2 percent); Cleveland (+2.2 percent); Seattle (+1.7 percent); Houston (+1.4 percent); and New Orleans (+1 percent).
The five markets with the greatest year-over-year decreases in the RHPI were Boston (-13.8 percent); San Francisco (-13.5 percent); San Jose, Calif. (-12.2 percent); Baltimore (-11.2 percent); and San Diego (-11.2 percent).
“While there remains debate regarding the actual end date of the 2020 recession, there is no argument that the economic pain inflicted by the coronavirus continues to linger,” Fleming said. “Yet, housing affordability nationally has improved, and the housing market remains resilient. But, how have nominal house prices and affordability fared in previous economic declines and what can that tell us about today’s housing market?”