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Real House Price Growth Accelerating, According to First American Real House Price Index


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 September 2018 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.

September 2018 Real House Price Index

  • Real house prices increased 2.0 percent between August 2018 and September 2018.
  • 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 0.9 percent between August 2018 and September 2018, and declined 6.7 percent year over year.
  • Average household income has increased 2.9 percent since September 2017 and 53 percent since January 2000.
  • Real house prices are 37.0 percent below their housing boom peak in August 2006 and 11.0 percent below the level of prices in January 2000.

Chief Economist Analysis: Why is Real House Price Appreciation Accelerating?

In September, all three of the key drivers of the Real House Price Index (RHPI), household income, mortgage rates, and an unadjusted house price index, increased compared with a year ago, said Mark Fleming, chief economist at First American.

When household income rises, consumer house-buying power increases. When mortgage rates and house prices increase, consumer house-buying power decreases. The 30-year, fixed-rate mortgage and the unadjusted house price index increased by 0.8 and 7.5 percent, respectively, said Fleming. Even though household income increased 2.9 percent since September 2017 and boosted consumer house-buying power, the Real House Price Index increased 15.3 percent compared to last September, the highest yearly growth rate since 2014.

Rising mortgage rates impact both housing supply and demand, limiting supply by reducing the propensity of sellers to sell and flattening demand by reducing consumer house-buying power, said Fleming. For home buyers, the only way to mitigate the loss of affordability caused by a higher mortgage rate is with an equivalent, if not greater, increase in household income.

The jump in mortgage rates reduced house-buying power by $36,000 since September 2017. Over the same period, household income growth increased consumer house-buying power by $10,000, said Fleming. The net effect? Overall consumer house-buying power fell by $26,000 in September compared with a year ago. At the moment, rising mortgage rates are winning the buying power tug of war with rising household incomes “ the pace of household income growth is not sufficient to fully offset the change in mortgage rates.

Where is Affordability Declining the Most?

As the age-old adage goes, housing is all about ˜location, location, location. Affordability is no different, said Fleming. The five markets with the highest year-over-year growth in the RHPI are:

  1. Cleveland, OH (+28.2 percent)
  2. Las Vegas, NV (+26.6 percent)
  3. Cincinnati, OH (+23.8 percent)
  4. Atlanta, GA (+23.4 percent)
  5. Orlando, FL (+22.6 percent)

At first glance, these markets dont seem to have much in common. Upon closer inspection, however, all five markets had household income growth below the national average of 2.9 percent. Orlando uniquely experienced a decline in household income of 0.4 percent compared with a year ago, said Fleming. The importance of household income growths ability to mitigate the loss of affordability from a rising mortgage rate is clear. Without stronger household income growth, rising mortgage rates will continue to impede consumer house-buying power, reducing affordability.

September 2018 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: Ohio (+21.1 percent), Nevada (+20.7 percent), Georgia (+19.9 percent), New Jersey (+19.1 percent), and New Hampshire (+18.8 percent).
  • No state had a year-over-year decrease in the RHPI in August.

September 2018 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: Cleveland (+28.2 percent), Las Vegas (+26.6 percent), Cincinnati (+23.8 percent), Atlanta (+23.4 percent), and Orlando, Fla. (+22.6 percent).

No CBSA had a year-over-year decrease in the RHPI in August.

Next Release

The next release of the First American Real House Price Index will take place the week of December 17, 2018 for October 2018 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 Americans Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First Americans 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. 2018 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 $5.8 billion in 2017, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2018, First American was named to the Fortune 100 Best Companies to Work For list for the third consecutive year. More information about the company can be found at

Media Contact:
Marcus Ginnaty
Corporate Communications
American Financial Corporation
(714) 250-3298

Investor Contact:
Craig Barberio
Investor Relations
American Financial Corporation
(714) 250-5214

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