Not All Markets ‘Boomed’ and Not All Markets Are ‘Busting,’ According to First American Real House Price Index

Price declines will continue across many markets, but those declines would have to be substantial to erase all the equity gains accumulated by homeowners over the last few years, says Chief Economist Mark Fleming—

SANTA ANA, Calif.–(BUSINESS WIRE)–First American Financial Corporation (NYSE: FAF), a premier provider of title, settlement and risk solutions for real estate transactions and the leader in the digital transformation of its industry, today released the January 2023 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.

Chief Economist Analysis: Real House Prices Decreased 1 Percent Month Over Month

“Affordability has now improved for three straight months, yet remains down 39 percent since January 2022, according to the RHPI. Nominal house price appreciation has slowed dramatically in response to dampened demand. Nationally, annual nominal house price growth peaked in March 2022 at 21 percent, but has since decelerated by nearly 17 percentage points to 4.4 percent in January,” said Mark Fleming, chief economist at First American. “The pandemic-era boom in house prices was broad-based, with house prices increasing by an average of approximately 42 percent from pre-pandemic to peak in the 10 markets now experiencing the lowest annual price growth. Now, as house prices adjust to the reality of higher mortgage rates, it’s becoming clear that the pace of adjustment will vary significantly by market.”

What Factors Determine Boom and Bust Markets?

“The ongoing adjustment in house prices is broad-based as well, with nominal house prices declining in January from their recent peaks in 35 of the top 50 markets we track, but also varies significantly by market. In some markets, house prices have declined from recent peaks by double-digits, while house prices in other markets have yet to decline,” said Fleming. “Of course, repeat-sales price indices, such as the one used in this analysis are based on closed sales prices, which are a lagging indicator of price changes in the housing market because the contracts for these closed sales were set months earlier. Even so, a pattern emerges that allows us to separate markets into four categories1: boom-bust; boom-no bust; no boom-bust; and no boom-no bust.”

  • Boom-Bust: “An example of a boom-bust market is Phoenix. House prices increased 65 percent from February 2020 to the peak in May of 2022 but have since declined by nearly 8 percent. Phoenix is emblematic of the expression — the higher they rise, the harder they fall. Demand skyrocketed, partially because of significant net-in migration to Phoenix over the course of the pandemic. Of the top 50 markets we track, Phoenix experienced the fourth highest growth in population from 2020 to 2021,” said Fleming. “Additionally, according to our calculations using data from First American Data & Analytics, more than 30 percent of all residential home sales in Phoenix in the summer of 2022 were investor purchases of residential homes as rental properties, indicating heightened investor demand. However, the share of investor purchases has declined significantly since then. The swift pullback in demand due to declining affordability is dragging down house prices.”
  • Boom-No Bust: “Miami is an example of a boom-no bust market. In fact, house prices have yet to decline in Miami. Since the start of the pandemic, Miami house prices have increased by over 56 percent,” said Fleming. “John Burns Real Estate Consulting national survey results from February indicate that the southern Florida housing market is holding up better than most of the country, in part, because of the prevalence of cash buyers, who are not deterred by rising mortgage rates, making demand more resilient.”
  • No Boom-Bust: “The example of a no boom-bust market is San Jose, Calif. In San Jose, house prices increased 30 percent from February 2020 until the peak in April 2022 and have since declined by 11 percent from the peak. While San Jose prices have declined the most from peak among the markets tracked, it was in the bottom 10 markets for pre-pandemic-to-peak growth,” said Fleming. “Many of the markets with the largest price declines from peak, such as San Jose and San Francisco are also considered ‘overvalued’ markets, meaning the median existing-home sale price exceeded house-buying power in these markets pre-bust. For San Jose in January, the housing market was still overvalued by $549,000. These larger coastal markets have long been among the most expensive, so when mortgage rates nearly doubled in a year, the pullback in demand in these already expensive markets was more pronounced.”
  • No Boom-No Bust: “New York is an example of a no boom-no bust market. The pre-pandemic-to-peak growth rate in New York was nearly 32 percent, muted compared with other top markets,” said Fleming. “House prices have not yet declined in New York, in part because there was less of a boom during the pandemic, as many residents flocked to the suburbs from the density of the city. Not as fast of a rise, not as hard of a fall.”

Prices Declines May Continue, But Equity Buffers Remain

“While prices declines will likely continue across the top 50 markets, there is one trend that bodes well for all markets – much of the homeowner equity gained during the pandemic remains,” said Fleming. “As the housing market rebalances, price declines will continue across many markets, but those declines would have to be substantial to erase all of the equity gains accumulated by homeowners during the pandemic boom.”

January 2023 Real House Price Index Highlights

  • Real house prices decreased 0.9 percent between December 2022 and January 2023.
  • Real house prices increased 38.8 percent between January 2022 and January 2023.
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 1.3 percent between December 2022 and January 2023, and decreased 24.8 percent year over year.
  • Median household income has increased 4.1 percent since January 2022 and 80.3 percent since January 2000.
  • Real house prices are 32.8 percent more expensive than in January 2000.
  • Unadjusted house prices are now 48 percent above the housing boom peak in 2006, while real, house-buying power-adjusted house prices are 7.1 percent below their 2006 housing boom peak.

January 2023 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: Vermont (+52.8 percent), Alabama (+49.4 percent), Maryland (+48.2 percent), New Hampshire (+47.8 percent), and Florida (+47.4).
  • There were no states with a year-over-year decrease in the RHPI.

January 2023 Real House Price Local Market Highlights

  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are: Miami (+59.5 percent), Indianapolis (+57.0 percent), Orlando, Fla. (+49.1 percent), Baltimore (+47.1 percent), Jacksonville, Fla. (+46.5 percent).
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, there were no markets with a year-over-year decrease in the RHPI.

Next Release

The next release of the First American Real House Price Index will take place the week of April 17, 2023 for February 2023 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. © 2023 by First American. Information from this page may be used with proper attribution.

About First American

First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $7.6 billion in 2021, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2022, First American was named one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine for the seventh consecutive year. More information about the company can be found at

1 If a market is above the average rate of nominal house price from 2020 until the peak, then it is considered a pandemic “boom” market. If a market is below the average rate of growth from peak-to-January 2023, then that is considered a bust market. The average pre-pandemic to peak growth rate was 41 percent, while the average peak-to-current growth was -2 percent.


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