Revisiting Boom-Bust Markets After Recovery in House Price Growth

In December 2023, home buyers received a welcome holiday gift as mortgage rates fell and affordability improved by 6 percent over November, according to the Real House Price Index (RHPI). However, on an annualized basis, affordability decreased by nearly 9 percent. Two factors drove the sharp annualized drop in affordability – a 7.7 percent annual increase in nominal house prices, according to our First American Data & Analytics House Price Index, and a 0.5 percentage point increase in the 30-year, fixed mortgage rate compared with one year ago. 

For home buyers, holding prices constant, the only way to mitigate the loss of affordability caused by higher mortgage rates is with an equivalent, if not greater, increase in household income. Even though household income increased 3.9 percent since December 2022 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher mortgage rates and rising nominal prices. 


“In 2023, house prices re-accelerated in many markets with 33 of the top 50 markets reaching a new house price peak in December.” 

Re-Acceleration in House Prices Prompts Re-Examination of Boom-Bust Markets 

A year ago, we separated the top 50 markets into four categories1 : boom-bust, boom-no bust, no boom-bust, and no boom-no bust. In January of 2023, nominal house prices had declined from their recent peaks in 35 of the top 50 markets we track. Since then, house prices have re-accelerated in many markets with 33 of the top 50 markets reaching a new house price peak in December and only 17 markets with house prices below their recent peaks.


Boom-Bust: Only two markets remain in the boom-bust category: Austin, Texas and Phoenix. House prices increased 65 percent from February 2020 to the peak in May of 2022 in both markets. Since then, nominal house prices have declined by 6 percent and 3.8 percent, respectively. House prices in these pandemic “boom towns” overheated during the pandemic, but prices are now ‘busting.’


No Boom-Bust: The example of a no boom-bust market is San Francisco. In San Francisco, house prices increased 31 percent from February 2020 until the peak in April 2022, lower than the average growth rate across the top 50 markets. Prices have since declined by 8 percent from the peak. Other markets in this category include Sacramento, Calif., Seattle, and San Jose, Calif. These coastal markets have long been among the most expensive and there wasn’t as much room for prices to rise from pre-pandemic to peak, but when mortgage rates more than doubled in a year, those already expensive markets felt the pain from the corresponding pullback in demand.


Boom-No Bust: Miami is an example of a boom-no bust market. Miami has yet to experience price declines. Since the start of the pandemic, Miami house prices have increased by over 67 percent. The Florida housing market has held up better than most of the country, in part, because of cash buyers that are undeterred by rising mortgage rates, but also because it has become a popular relocation destination.


No Boom-No Bust: New York is an example of a no boom-no bust market. The pre-pandemic-to-peak growth rate in New York was nearly 41 percent, muted compared with other top markets. New York house prices dipped briefly and modestly in 2022, but have since re-accelerated to a new historic peak. New York house prices didn’t ‘boom’ during the pandemic relative to other markets, as many residents flocked to the suburbs from the density of the city. Not as fast a rise, not as hard a fall.



 1If a market is above the average rate of nominal house price from 2020 until the peak, then it is considered a pandemic “boom” market. If a market is below the average rate of growth from peak-to-December 2023, then that is considered a bust market. The average pre-pandemic to peak growth rate was 48 percent, while the average peak-to-current growth was approximately -1 percent.


Nominal House Price Growth, graph


Equity Still a Bright Spot

House prices continue to reach new heights nationally, but the boom-bust dynamic has played out very differently from market-to-market. House prices are correcting in some markets, especially in markets where house prices grew the most over the pandemic. Other markets are facing price corrections because higher mortgage rates exacerbated a pre-existing affordability crunch. 

The good news for the housing market is that, even in the markets where prices have declined from their peaks, the corrections have not been severe enough to erase all the equity that was gained over the pandemic. Substantial equity, regardless of the market, remains for those that were able to benefit from house price gains over the pandemic.   

For more analysis of affordability, please visit the Real House Price Index. The RHPI is updated monthly with new data. Look for the next edition of the RHPI the week of March 11, 2024. Starting this month, the monthly RHPI analysis will be published earlier in the month. 



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



December 2023 Real House Price Index Highlights


The First American Data & Analytics’ Real House Price Index (RHPI) showed that in December 2023:

  • Real house prices decreased 6.0 percent between November 2023 and December 2023.  
  • Real house prices increased 8.6 percent between December 2022 and December 2023.
  • Consumer house-buying power, how much one can buy based on changes in income and mortgage rates, increased 6.8 percent between November 2023 and December 2023, and decreased 0.9 percent year over year.
  • Median household income has increased 3.9 percent since December 2022 and 88.3 percent since January 2000.
  • Real house prices are 43.3 percent more expensive than in January 2000.
  • Unadjusted house prices are now 57.8 percent above the housing boom peak in 2006, while real, house-buying power-adjusted house prices are 0.3 percent above their 2006 housing boom peak. 


December 2023 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: South Dakota (+17.4 percent), New Mexico (+16.8 percent), New Jersey (+16.1 percent), Maine (+15.7), and Vermont (+15.4 percent).
  • There were no states with a year-over-year decrease in the RHPI.


December 2023 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: Cincinnati (+13.5 percent), Hartford, Conn. (+12.4 percent), Providence, R.I. (+10.2 percent), San Diego (+10.1 percent), and San Jose, Calif. (+10.1 percent).
  • There were no markets with a year-over-year decrease in the RHPI.

Next Release


The next release of the First American Data & Analytics’ Real House Price Index will take place the week of March 11, 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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