Real house prices increased 0.8 percent between November and October 2018, according to the First American Real House Price Index. Real house prices increased 15.3 percent year over year.
Consumer house-buying power, how much one can buy based on changes in income and interest rates, decreased 0.04 percent between October 2018 and November 2018, and declined 7.5 percent year over year. Average household income has increased 3.5 percent since November 2017 and 54.3 percent since January 2000.
Real house prices are 9 percent lower than in January 2000. While unadjusted house prices are now 1.8 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 35.3 percent below their 2006 housing boom peak.
“Throughout 2018, consistent growth among three driving forces – mortgage rates, household income, and unadjusted house prices defined the housing market. These three factors are also the core metrics that comprise the RHPI,” said Mark Fleming, chief economist for First American. “November 2018 was no exception, as household income, mortgage rates, and the unadjusted house price index all increased compared with a year ago. The 30-year, fixed-rate mortgage increased by nearly 1 percent and the unadjusted house price index jumped 6.7 percent.”
The six cities in which the RHPI declined on a month-over-month basis are as follows:
- San Jose, Calif. (- 0.7 percent)
- Boston (- 0.4 percent)
- Portland, Oregon (- 0.2 percent)
- Pittsburgh (- 0.2 percent)
- San Diego (- 0.1 percent)
- Seattle, (- 0.1 percent)
“Six cities are leading the shift in the housing market. Consider that in October 2018, real house prices increased month over month in all 44 of the markets we track in the RHPI,” said Fleming. “Rising inventory is one reason these markets are bucking the national trend. According to Realtor.com, the number of active listings increased year over year in five of the six markets listed. In San Jose, Seattle, and San Diego, the increase in active listings was substantial, as active listings jumped 158 percent, 77 percent, and 46 percent, respectively,” said Fleming. “As more inventory enters the market, buyers have more options, bidding wars are less likely and sellers start reducing list prices.”
