Key Takeaways:

• Home Price Appreciation Rose 4.1% Year-over-Year in April 2019;
• Low Price Tier Continues to Overheat;
• Seller’s Market Conditions Persist, but Show Some Moderation on a National Basis.

Home price appreciation (HPA) for April 2019, as reported by the AEI Housing Center, was 4.1%, down from 5.2% in April 2018.  However, HPA has begun to re-accelerate--the April rate is up from 3.8% in March 2019 and the recent low of 3.5% in January 2019. Note: all rates are year-over-year (y-o-y).

For the nation, house prices since 2012 have increased 42%, well in excess of wage growth of 25% over the same period.  When broken down by price tier, the low tier continues to overheat, having increased by 55% since 2012. The low-medium tier has increased by 41%, the medium-high by 35%, and the high tier by 18%.

Seller’s market conditions continue, but show some moderation on a national basis.  The national seller’s market, now entering its sixth year, continues to be largely driven by strong demand and tight supply in the low and low-medium price tiers.

“The U.S. housing market continues to heat up, due to sharply lower interest rates, continued easy credit availability, and persistently tight supply,” said Edward Pinto, co-director of the AEI Housing Center. He added: “The national seller’s market, now in its sixth year, is largely driven by month’s inventory for the low and low-medium tiers of [2.5] and [3] months respectively.” Pinto also noted: “Rising HPA with respect to the low and low-medium tiers (about 75% of which are first-time buyers (FTBs)) continue to strain the budgets of these buyers. In February (latest data available) 37% of all FTBs had a total debt-to-income ratio in excess of 43%, the Qualified Mortgage regulatory limit due to become effective for most loans starting in January 2021.”

“The low, low-medium, and medium-high price segments, accounting for over 90% of the market, are all showing accelerating house price appreciation year-over-year,” observed Tobias Peter, senior research analyst at the AEI Housing Center. He added: “It is only the high price segment, accounting for less than 10% of the market, that has April still showing a year-over-year decline, however that 0.4% decline is a marked improvement from February’s decline of 2.1%.” He also noted: “With mortgage rates now down a full point since November 2018, we can expect a further rebound in the rate of house price appreciation and a strengthening of seller’s market conditions.”

HPA and months’ supply data are available for download on the Housing Center’s website.

To view the full report as a PDF and to view the methodology, please click here.