Affordability Challenges Prompt a House Price Slowdown

Mortgage rates continued their spring surge in April 2024, rising to the highest level in five months and helping drag affordability down by 1.5 percent compared with March, according to the Real House Price Index (RHPI). On an annualized basis, affordability decreased by 9 percent. Two factors drove the year-over-year decline in affordability – a 6.0 percent annual increase in nominal house prices, according to our First American Data & Analytics House Price Index, and a 0.65 percentage point increase in the average 30-year, fixed mortgage rate compared with one year ago. 

A recent uptick in inventory amid a pullback in demand due to declining affordability means price appreciation nationally is cooling. Annual national house price growth peaked in the spring of 2022 at over 20 percent, but has since slowed to 6 percent, which is still strong by historical standards. However, house price trends vary by market, and house prices in some markets have fallen further and faster than others. Changes in house prices matter because house prices, along with mortgage rates and household income, are a key component of housing affordability.


“Affordability will likely remain a drag on the housing market until house-buying power recovers or house prices cool.” 

What Goes Up May Not Come All the Way Back Down

House prices have fallen below their respective peaks in 37 of the top 50 markets we track as of April, which is five more markets than in March. The market with the greatest decline was Austin, Texas, where nominal house prices peaked in June 2022, but have since declined by 7.8 percent as the housing market rebalances. Austin was at the forefront of the U.S. housing boom, making it a leading pandemic ‘boomtown.’ The dramatic increase in mortgage rates has had an outsized effect on markets, like Austin, that saw some of the largest pandemic price gains.

San Francisco follows closely behind, as nominal house prices have declined 5.9 percent from the recent peak in April 2022. San Francisco is an example of a market that has long been among the most expensive. When mortgage rates increased and affordability declined, house prices in already expensive markets reacted sharply to the pullback in demand. 

However, while prices have declined from their respective peaks in these markets, much of the price growth that was gained during the pandemic remains. For example, in Austin, house prices increased 65 percent from February 2020 to June 2022. Similarly in San Francisco, prices increased 31 percent from February 2020 to April 2022. Even if house prices decline further, the decline would have to be substantial and persistent to erode all the equity that many homeowners have accumulated over the last few years.


Nominal House Price Growth, Graph


Reaching New Heights in More Affordable Markets

There remain 13 markets where house prices continue to reach new heights. These are traditionally more affordable markets such as: Cincinnati, Columbus, Ohio, and Detroit.  Affordability is top of mind for many buyers and, while house prices continue to rise in these markets, they are still below the national average. Demand remains strong in these more affordable markets amid an ongoing shortage of supply, putting upward pressure on prices.

Prices Likely to Fall Further, But Not All the Way

Since the Federal Reserve started hiking interest rates in March 2022, house-buying power nationally has declined by 21 percent, or $94,000, while house prices are up 9 percent nationally over the same period. Affordability will likely remain a drag on the housing market until house-buying power recovers or house prices cool. A ‘higher-for-longer’ mortgage rate environment will continue to sap house-buying power and, with inventory picking up, may prolong the cooling trend for house prices. However, many potential home sellers gained quite a bit of equity over the pandemic, so price declines are unlikely to offset all of the gains.



•    First American Data & Analytics
•    Freddie Mac
•    Census Bureau



April 2024 Real House Price Index Highlights


The First American Data & Analytics’ RHPI showed that in April 2024:

  • Real house prices increased 1.5 percent between March 2024 and April 2024.   
  • Real house prices increased 9.0 percent between April 2023 and April 2024.
  • Consumer house-buying power, how much one can buy based on changes in income and mortgage rates, decreased 1.4 percent between March 2024 and April 2024, and decreased 2.8 percent year over year.
  • Median household income has increased 4.0 percent since March 2024 and 90.8 percent since January 2000.
  • Unadjusted house prices are now 58.9 percent above the housing boom peak in 2006, while real, house-buying power-adjusted house prices are 1.5 percent above their 2006 housing boom peak. 
  • Real house prices are 45.1 percent more expensive than in January 2000.


April 2024 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: West Virginia (+21.9 percent), Delaware (+19.0 percent), Rhode Island (+17.2 percent), New Jersey (+16.8 percent), and Illinois (+16.0 percent).
  • There were no states with a year-over-year decrease in the RHPI.


April 2024 Real House Price Local Market Highlights

  • Among the Core Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year increase in the RHPI are: Memphis, Tenn. (+20.5 percent), Providence, R.I. (+19.6 percent), Cincinnati (+18.0 percent), Boston (+17.5 percent), and Seattle (+17.3 percent).
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the only market with a year-over-year decrease in the RHPI is: Denver (-0.6 percent).    

Next Release


The next release of the First American Data & Analytics’ Real House Price Index will take place the week of June 24, 2024.

About the First American Data & Analytics’ Real House Price Index


The traditional perspective on house prices is fixated on the actual prices and the changes in those prices, which overlooks what matters to potential buyers - their purchasing power, or how much they can afford to buy. First American Data & Analytics’ proprietary Real House Price Index (RHPI) adjusts prices for purchasing power by considering how income levels and interest rates influence the amount one can borrow.

The RHPI uses a weighted repeat-sales house price index that measures the price movements of single-family residential properties by time and across geographies, adjusted for the influence of income and interest rate changes on consumer house-buying power. The index is set to equal 100 in January 2000. Changing incomes and interest rates either increase or decrease consumer house-buying power. When incomes rise and mortgage rates fall, consumer house-buying power increases, acting as a deflator of increases in the house price level. For example, if the house price index increases by three percent, but the combination of rising incomes and falling mortgage rates increase consumer buying power over the same period by two percent, then the Real House Price index only increases by 1 percent. The Real House Price Index reflects changes in house prices, but also accounts for changes in consumer house-buying power. 



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