First American Financial Corporation will release its latest House Price Index on Monday, after July’s report [1] showed home prices rose 0.5% and consumer house-buying also rose 0.5% month-over-month.
During that same period, real-house prices declined 3.8% between July 2018 and July 2019. The average household income increased 2.4% since last year and nearly 57% since January 2000.
Mark Fleming, Chief Economist at First American, said fall is not only the beginning of school, but also the end of the home-buying season. This year, Fleming said, the housing market received passing grades on affordability.
According to DataTree by First American, 57% of all housing transactions occurred between March and August 2018
“Between March and July 2019, overall affordability improved 2.7%. Consumer house-buying power fueled the affordability growth, increasing to $410,271, a 6.7% gain since the start of the home-buying season in March,” said Fleming. “Mortgage rates continued their spring swoon in July, falling to 3.77%, 0.5-percentage points lower than March.
“The decline in mortgage rates alone increased house-buying power by $23,900 since March 2019. Over the same period, household income grew by 0.4%, boosting consumer house-buying power by $1,600.”
Overall, Fleming said, consumer house-buying power grew by $25,500 in July compared to March.
“Once again, the growth in purchasing power was more than enough to offset the 3.8% gain in nominal house prices over the same time. So, nationally, affordability did spring forward during the 2019 home-buying season,” he said.
Affordability increased in the 44 markets tracked by First AM. San Jose, California, saw the largest increase at 8.04%. St. Louis, Missouri, reported a 7.45% increase in affordability, followed by Hartford, Connecticut (7.43%); and Salt Lake City, Utah (7.35%).
Here's what else is happening in The Week Ahead:
NAR Pending Home Sales Index (October 28)
S&P CoreLogic Case Shiller (October 29)
Census Bureau Vacancies and Homeownership Report (October 29)
House Financial Services Hearing on LGBTQ Discrimination in Housing and Lending (October 29)