Key Points:

• Housing affordability improved 7.8 percent annually in March, marking the sixth consecutive month of annual affordability gains.
  
  
• Mortgage rates increased from 6.05 percent in February to 6.18 percent in March and moved even higher in April and May, reducing some of the affordability momentum entering the spring housing market.
  
  
• Affordability improved in 91 of the top 100 markets tracked, but local house price and income dynamics continued to drive significant differences across markets.

Housing affordability improved on an annual basis in March for the sixth consecutive month, according to the First American Data & Analytics Real House Price Index (RHPI). Compared with one year ago, affordability improved 7.8 percent as lower mortgage rates boosted consumer house-buying power, while household income growth outpaced flat nominal house price growth. But, just as the spring home-buying season began, mortgage rates reversed course. The average 30-year, fixed mortgage rate increased from 6.05 percent in February — the lowest level since 2022 — to 6.18 percent in March, climbing further in April and moving even higher in May amid renewed bond market volatility following escalating geopolitical tensions in the Middle East.

While affordability conditions remain better than a year ago, the recent increase in rates dampened some of the momentum the housing market carried into spring. Had mortgage rates remained at February levels through March, affordability nationally would have improved by approximately 9 percent year over year instead of 7.8 percent. In other words, affordability still improved, but not as much as it could have. The recent rate rebound underscores a defining feature of today’s housing market: affordability conditions are gradually improving, but the recovery remains fragile because mortgage rates still exert an outsized influence on house-buying power. For example, a 25-basis-point increase in mortgage rates from 6.05 percent in February to roughly 6.3 percent in April reduces consumer house-buying power by approximately $11,000, assuming income remains unchanged.

“Affordability is moving in the right direction nationally — just more slowly, and less evenly, than many expected only a few months ago.”  

Local Markets Reveal a More Uneven Housing Landscape

While affordability improved nationally on an annual basis, trends at the market level were far less uniform in March. In February, affordability improved annually in all 100 markets we track for the first time since October 2024. But, in March, affordability improved in 91 of the top 100 markets, while affordability declined annually in nine markets. Markets where affordability declined shared a common characteristic: continued nominal house price appreciation. The largest affordability declines were in Hartford, Conn., New Haven, Conn., Albany, N.Y., Poughkeepsie, N.Y., and Allentown, Pa., where ongoing house price growth offset affordability gains from lower mortgage rates compared with a year earlier. 

Yet, even among markets where affordability worsened, the underlying drivers varied considerably. For example, household income growth remained positive in New Haven, Conn. on an annual basis, helping partially offset affordability pressures, while negative household income growth in Hartford, Conn. compounded the impact of continued house price appreciation on affordability.

Note: Higher RHPI values indicate declining affordability, and vice versa.

By contrast, the strongest affordability improvements were concentrated in markets across the South and West, where pandemic-era house price growth has cooled most sharply. However, even among markets where affordability improved, the underlying drivers varied considerably. In Cape Coral, Fla., affordability improved significantly as nominal house prices declined by approximately 5 percent annually, although household income growth remained relatively muted at 0.3 percent. Meanwhile, affordability also improved in Seattle, but through a different combination of factors. House price declines were more modest at approximately 2 percent, while stronger household income growth of 7 percent provided a larger boost to consumer house-buying power.

The variation across markets highlights an important feature of today’s housing market: while mortgage rates remain a key national driver of affordability, local house price and income dynamics increasingly determine whether affordability improves or worsens across individual markets.

What It Means for the Spring Housing Market

The housing market entered the spring season with stronger affordability fundamentals than a year ago, but the recent rebound in mortgage rates is a reminder that affordability gains remain vulnerable to shifts in financial markets and the broader economic environment. While improving affordability and rising inventory are beginning to bring some buyers back into the market, higher borrowing costs continue to constrain purchasing power and limit how quickly conditions can improve. Affordability is moving in the right direction nationally — just more slowly, and less evenly, than many expected only a few months ago.

Sources:

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

March 2026 Real House Price Index Highlights

The First American Data & Analytics’ Real House Price Index (RHPI) showed that in March 2026:

• Real house prices increased 1.0 percent between February 2026 and March 2026.
  
  
• Real house prices decreased 7.8 percent between March 2025 and March 2026.
  
  
• Consumer house-buying power, how much one can buy based on changes in income and mortgage rates, decreased 1.1 percent between February 2026 and March 2026, and increased 8.9 percent year over year.
  
  
• Median household income has increased 3.7 percent since March 2025 and 51.1 percent since March 2016.
  
  
• Real house prices are 26.6 percent more expensive than in January 2000.
  
  
• Unadjusted house prices are now 65.4 percent above the housing boom peak in 2006, while real, house-buying power-adjusted house prices are 10.4 percent below their 2006 housing boom peak. 

March 2026 Real House Price State Highlights

• The only state with a year-over-year increase in the RHPI is: Vermont (+0.1 percent).
  
  
• The five states with the greatest year-over-year decrease in the RHPI are: Georgia (-13.5 percent), Florida (-11.6 percent), Washington (-10.8 percent), Nevada (-10.0 percent), and Texas (-8.7 percent).

March 2026 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: Hartford, Conn. (+5.7 percent), New Haven, Conn. (+5.7 percent), Albany, N.Y. (+4.0 percent), Poughkeepsie, N.Y. (+1.8 percent), and Allentown, Pa. (+1.8 percent).
  
  
• Among the Core Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year decrease in the RHPI are: Seattle (-12.8 percent), Atlanta (-12.7 percent), Tampa Fla. (-12.1 percent), Sarasota, Fla. (-12.0 percent), and Denver (-11.8 percent).

Next Release

The next release of the First American Data & Analytics’ Real House Price Index will take place the week of June 29, 2026.

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. 
 

Disclaimer

Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2026 by First American. Information from this page may be used with proper attribution.