Real house prices increased 0.78 percent between August 2020 and September 2020, according to the latest
First American Real House Price Index (RHPI).
However, according to the RHPI, real house prices declined 5 percent between September 2019 and September 2020.
Additionally, consumer house-buying power (how much one can buy based on changes in income and interest rates) increased 0.79 percent between August 2020 and September 2020 and increased 15.9 percent year-over-year.
“Affordability declined month over month in September for the second month in a row, even as two of the three key drivers of the [RHPI], household income and mortgage rates, swung in favor of increased affordability,” First American Chief Economist Mark Fleming said in a release. “The 30-year, fixed-rate mortgage fell by 0.05 percentage points and household income increased 0.2 percent compared with August 2020. Rising household income and declining mortgage rates each boost consumer house-buying power.” “
“However, rising house-buying power drives greater demand, and surging demand in a supply-constrained market fuels faster nominal house price appreciation,” Fleming added. “This is exactly what occurred in September, as nominal house prices, the third component of the RHPI, appreciated at its fastest monthly pace since 2013.”
The five states with the greatest year-over-year increase in the RHPI were: Wyoming (+3.2 percent); Oklahoma (+1.6 percent); Ohio (+1 percent); Tennessee (+0.9 percent); and Arizona (+0.5 percent).
The five states with the greatest year-over-year decrease in the RHPI were California (-8.2 percent); New Hampshire (-7.6 percent); Massachusetts (-7.4 percent); Hawaii (-7.3 percent); and Maryland (-6.7 percent).
“The rapid house price appreciation was enough to overcome the benefit of increased house-buying power,” Fleming said. “But real estate is local and house-buying power and nominal house price gains vary by city, so the national perspective may not tell us much about what’s happening to affordability where you live.”