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Affordability Surged Throughout Spring Home-Buying Season, According to First American Real House Price Index

In a housing market with limited supply, a surge in demand from home buyers trying to take advantage of rising house-buying power can drive faster price appreciation, making further affordability gains more difficult, says Chief Economist Mark Fleming—

SANTA ANA, Calif.–(BUSINESS WIRE)–First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the July 2019 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

July 2019 Real House Price Index

  • Real house prices increased 0.5 percent between June 2019 and July 2019.
  • Real house prices declined 3.8 percent between July 2018 and July 2019.
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 0.5 percent between June 2019 and July 2019, and increased 12.2 percent year over year.
  • Average household income has increased 2.4 percent since July 2018 and 56.6 percent since January 2000.
  • Real house prices are 17.0 percent less expensive than in January 2000.
  • While unadjusted house prices are now 7.4 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 41.1 percent below their 2006 housing boom peak.

Chief Economist Analysis: Affordability Continued to Improve in July

“School bells ringing don’t just mark the beginning of a new school year, but for those in housing, they also signal the end of the typical home-buying season, which begins in March. As the school year begins, the housing market is finishing the spring home-buying season with strong marks for affordability,” said Mark Fleming, chief economist at First American. “Indeed, two of the three key drivers of the Real House Price Index (RHPI), household income and mortgage rates, continued to trend toward increased affordability in July. The 30-year, fixed-rate mortgage fell by 0.8 percentage points and household income increased 2.4 percent compared with July 2018. When household income rises and mortgage rates decline, consumer house-buying power increases.

“However, the third component of the RHPI, nominal house prices, experienced a year-over-year increase of 8.0 percent in July, decreasing affordability. Yet, even though nominal house prices increased, the RHPI declined 3.8 percent compared with one year ago,” said Fleming. “Affordability improved year-over-year as the increase in house-buying power more than offset the impact of higher nominal house prices. Given the home-buying season is coming to a close for the year, let’s consider how affordability changed during the 2019 home-buying season.”

Did Affordability Spring Forward?

“The home-buying season begins in the spring and then continues into the mid-summer months. Family vacations and preparation for the new school year typically bring the home-buying season to a close,” said Fleming. “In fact, according to data from DataTree by First American, 57 percent of all housing transactions annually occurred between March and August in 2018.

“Between March and July 2019, overall affordability improved 2.7 percent. Consumer house-buying power fueled the affordability growth, increasing to $410,271, a 6.7 percent gain since the start of the home-buying season in March,” said Fleming. “Mortgage rates continued their spring swoon in July, falling to 3.77 percent, 0.5 percentage points lower than March. The decline in mortgage rates alone increased house-buying power by $23,900 since March 2019. Over the same period, household income grew by 0.4 percent, boosting consumer house-buying power by $1,600.

“Cumulatively, overall consumer house-buying power increased by $25,500 in July compared with the beginning of the spring home-buying season in March,” said Fleming. “Once again, the growth in purchasing power was more than enough to offset the 3.8 percent gain in nominal house prices over the same time. So, nationally, affordability did spring forward during the 2019 home-buying season.”

Affordability Improved Across All Cities in the RHPI

“While affordability improved nationally, real estate is all about ‘location, location, location.’ Of the 44 markets tracked in the RHPI, affordability improved in all of them compared with March 2019,” said Fleming. “The five markets with the greatest increase in affordability during the 2019 spring home-buying season were:

  1. San Jose, Calif. (-8.04 percent)
  2. Baltimore (-7.97 percent)
  3. St. Louis (-7.45 percent)
  4. Hartford, Conn. (-7.43 percent)
  5. Salt Lake City (-7.35 percent)

“The surge in affordability offered home buyers a window of opportunity during the spring home-buying season. However, increased affordability results in more demand for homes, which puts upward pressure on nominal house prices. In fact, on a month-over-month basis, 25 of the 44 markets we track experienced declining affordability in July compared to June, indicating that the housing market is adjusting to the added demand,” said Fleming. “In a housing market with limited supply, a surge in demand from home buyers trying to take advantage of rising house-buying power can drive faster price appreciation, making further affordability gains more difficult.”

July Real House Price State Highlights

  • The only state with a year-over-year increase in the RHPI is: Rhode Island (+0.7 percent).
  • The five states with the greatest year-over-year decrease in the RHPI are: North Dakota (-9.7 percent), California (-9.1 percent), Wyoming (-9.0 percent), West Virginia (-8.7 percent), and New Mexico (-8.4 percent).

July 2019 Real House Price Local Market Highlights

  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, the only market with a year-over-year increase in the RHPI is: Providence, R.I. (+2.6 percent).
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year decrease in the RHPI are: San Jose, Calif. (-15.5 percent), Seattle (-10.4 percent), San Francisco (-10.1 percent), Portland, Ore. (-9.5 percent), and Los Angeles (-9.1 percent).

Next Release

The next release of the First American Real House Price Index will take place the week of October 28, 2019 for August 2019 data.



The methodology statement for the First American Real House Price Index is available at


Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2019 by First American. Information from this page may be used with proper attribution.

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $5.7 billion in 2018, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2019, First American was named to the Fortune 100 Best Companies to Work For® list for the fourth consecutive year. More information about the company can be found at


Media Contact:
Marcus Ginnaty

Corporate Communications

First American Financial Corporation

(714) 250-3298

Investor Contact:
Craig Barberio

Investor Relations

First American Financial Corporation

(714) 250-5214


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