Real house prices decreased by 2.4 percent between November 2018 and December 2018 and were down by 11.8 percent from December 2017 to December 2018, according to new data from First American Financial Corp.
During December, First American found that consumer house-buying power—the level of how much one can buy based on changes in income and interest rates—increased by 3.1 percent from the previous month but fell 5 percent from the previous year. The five states with the greatest year-over-year increase in First American’s Real Housee Price Index in December were the District of Columbia (up 19.1 percent), Ohio (17 percent), Montana (16.7 percent), Nevada (16.6 percent) and New Jersey (16.4 percent); no state had a year-over-year decrease in the RHPI in December.
“While housing affordability in 2018 fared poorly in comparison to 2017, decreasing 11.8 percent in December compared with a year earlier, the year finished strong in December thanks to declining mortgage rates,” said Mark Fleming, chief economist at First American. “Mortgage rates in December fell 0.23 percentage points compared with the previous month and household income increased 0.4 percent. The effect: a 3.1 percent increase in house-buying power, the largest monthly gain in more than five years. As a result, real house prices experienced the largest monthly decline (2.4 percent) since 2016. December delivered a significant holiday housing affordability boost to prospective home buyers.”