This continues to be a great year for homebuyers.
Homebuyers saw their buying power increase in July, capping a surge in affordability during the spring buying season. First American’s Real Home Price Index shows that real home prices (based on price changes of single-family properties throughout the US adjusted for the impact of income and interest rate changes on consumer house-buying power) increased 0.5% from June and were 3.8% lower than July 2018. Consumer house-buying power (how much one can buy based on changes in income and interest rates) increased 0.5% between June 2019 and July 2019 and increased 12.2% year over year. “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 interest rates, continued to trend toward increased affordability in July. The 30-year, fixed-rate loans fell by 0.8 percentage points and household income increased 2.4% compared with July 2018. When household income rises and rates decline, consumer house-buying power increases.” The third component, nominal house prices, increased 8% year-over-year but this was more than offset by the improvements in the other components.
Source: Mortgage Professional America