Real house prices fell by 1.6 percent between March and April, but increased by 11 percent from April 2016 to April 2017, according to data in the
latest First American Real House Price Index (RHPI) report, which also found unadjusted house prices increased by 5.7 percent in April on a year-over-year basis and are 2.6 percent above the housing boom peak in 2007.
The RHPI also determined that consumer housebuying power—defined as how much one can buy based on changes in income and the interest rate—had a slight 0.4 percent uptick between March and April while falling 4.5 percent year-over-year. And while housing prices have been on the rise in recent months, the RHPI stated real house prices are 33.6 percent below their housing-boom peak in July 2006 and 10.8 percent below the level of prices in January 2000.
“Despite the monetary tightening policies of the Federal Reserve, a dip in the average rate for a 30-year, fixed-rate mortgage and wage gains increased consumer house-buying power sufficiently to offset the gain in unadjusted house prices,” said Mark Fleming, First American’s chief economist. “The decline in real, purchasing-power adjusted house prices between March and April was the largest month-over-month decline since July 2016. Global uncertainty brought down the yield on the 10-year Treasury bill between March and April, which countered the Federal Reserve’s domestic monetary policy. The beneficial impact on consumer house-buying power brought widespread relief to the housing market, as all but two of the markets we track experienced an improvement in affordability over the same period. However, the prisoner’s dilemma that prevents existing homeowners from selling will continue drive up unadjusted house prices and reduce affordability.”
