Get Cash Back and $0 Commissions
+ The Power of TradeStation
Business Wire 25-Mar-2019 7:00 AM
—What happens when increasing demand for homes meets a market with tight supply? A rebound in house price appreciation appears likely, so the home buyer power play may be short lived, says Chief Economist Mark Fleming—
First American Financial Corporation (NYSE:FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the January 2019 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.
January 2019 Real House Price Index
Chief Economist Analysis: Market Trends Shift Toward Home Buyers in Early 2019
"While 2018 was largely characterized by declining affordability, ending the year with a five percent yearly decline in house-buying power, this trend reversed sharply in early 2019," said Fleming. "Moderating home prices, in conjunction with gains in household income and declining mortgage rates, boosted affordability for potential home buyers."
"Mortgage rates in January fell 0.18 percentage points compared with the previous month and household income increased 0.3 percent. The result? House-buying power increased 2.3 percent in January," said Fleming. "Additionally, nominal house price appreciation in January sank to the slowest pace of growth since February 2015, according to the DataTree by First American's House Price Index. As a result, real house prices fell 1.9 percent, the second largest monthly decline since April 2017."
Home Buyer Power Play: Rising Income, Lower Mortgage Rates, Slower House Price Appreciation
"In January, three forces swung toward home buyers, boosting their power in the housing market," said Fleming.
"Overall, house-buying power increased to $374,200, an impressive $8,600 gain in January compared with the previous month," said Fleming.
A Short-Lived Power Play?
"The decline in mortgage rates over the last two months and the positive impact from the strong job market and the demographic tailwind from the millennial generation aging into homeownership should translate into higher demand," said Fleming. "According to the Mortgage Bankers Association, new home mortgage applications surged 43 percent in January compared with the previous month. As wages continue to grow and mortgage rates remain low going into spring, we except demand to rise further. What happens when increasing demand for homes meets a market with tight supply? A rebound in house price appreciation appears likely, so the home buyer power play may be short lived."
January 2019 Real House Price State Highlights
January 2019 Real House Price Local Market Highlights
Next Release
The next release of the First American Real House Price Index will take place the week of April 29, 2019 for February 2019 data.
Methodology
The methodology statement for the First American Real House Price Index is available at http://www.firstam.com/economics/real-house-price-index.
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. © 2019 by First American. Information from this page may be used with proper attribution.
About First American
First American Financial Corporation (NYSE:FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $5.7 billion in 2018, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2019, First American was named to the Fortune 100 Best Companies to Work For® list for the fourth consecutive year. More information about the company can be found at www.firstam.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190325005113/en/