First American’s proprietary Real House Price Index (RHPI) looks at November 2016 data and includes analysis from First American Chief Economist Mark Fleming on a shift in affordability as real house prices increased for the first time in six months.
“The shift in affordability was driven primarily by rising mortgage rates. However, while rates are increasing, they remain extremely low from a historical standpoint.”
“Real purchasing-power adjusted house prices jumped 4.4 percent month-over-month, reversing a six-month trend of decreases. Year-over-year, real house prices have increased two percent. The shift in real house prices signals a decrease in affordability, driven primarily by rising mortgage rates. However, while rates are increasing, they remain extremely low from a historical standpoint,” said Fleming.
For Mark’s full analysis on affordability, the top five states and markets with the greatest increases and decreases in real house prices, and more, please visit the Real House Price Index.
The RHPI offers an alternative view of the change over time of house prices at the national, state and metropolitan area level. The traditional perspective on house prices is fixated on the actual prices and the changes in those prices, which overlooks what really matters to potential buyers - their purchasing power, or how much they can afford to buy. The RHPI adjusts prices for purchasing power by considering how income levels and interest rates influence the amount one can borrow.
The RHPI is updated monthly with new data. Look for the next edition of the RHPI the week of February 27, 2017.