The First American Real House Price Index reported a 1.9 percent decrease in real house prices between December 2018 and January 2019.

“While 2018 was 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 Mark Fleming, chief economist for First American Financial Corp. “Moderating home prices, in conjunction with gains in household income and declining mortgage rates, boosted affordability for potential home buyers.”

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Mortgage rates in January fell 0.18 percentage points compared with the previous month and household income increased 0.3 percent. The result was that house-buying power increased 2.3 percent in January. Also, nominal house price appreciation in January sank to the slowest pace of growth since February 2015, according to DataTree by First American’s House Price Index. The result was that real house prices fell 1.9 percent, the second largest monthly decline since April 2017.

Other takeaways from the report are the following:

• Real house prices increased 7.0 percent year over year.
• Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 2.3 percent between December 2018 and January 2019, and declined 1.6 percent year over year.
• Average household income has increased 3.6 percent since January 2018 and 55 percent since January 2000.
• Real house prices are 14 percent less expensive than in January 2000.
• While unadjusted house prices are now 1.6 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 38.8 percent below their 2006 housing boom peak.

January 2019 Real House Price State Highlights

• The five states with the greatest year-over-year increase in the RHPI are: Rhode Island (15.2 percent), New Hampshire (12.0 percent), Wisconsin (11.8 percent), Georgia (11.0 percent), and Alaska (10.8 percent).
• The only state with year-over-year decline in the RHPI is: Wyoming (down 1.9 percent).
• Among the Core Based Statistical Areas tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are: Providence, R.I. (17.3 percent), Columbus, Ohio (14.3 percent), Salt Lake City (13.6 percent), Orlando (13.5 percent), and Atlanta (12.5 percent).
• No CBSA had a year-over-year decrease in the RHPI in January.