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Housing Market Managing ‘Impressive V-Shaped Recovery’

home pricesAffordable homeownership opportunities continue to be an elusive object in the housing market, according to First American Financial Corp.’s newly-released First American Real House Price Index (RHPI) for June 

The report measures the price changes of single-family properties throughout the nation, adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state, and metropolitan area levelsAccording to the RHPI:  

 Mark Fleming, Chief Economist at First American, noted that the housing market “has thus far managed an impressive V-shaped recovery” despite the chaos that the COVID-19 pandemic had on the rest of the economy, although he observed that “growing demand against dwindling supply has worsened the supply and demand imbalance, which will continue to drive nominal house price appreciation. 

“Nationally, house-buying power, how much home one can afford to buy given their income and the prevailing 30-year, fixed-rate mortgage, continues to outpace nominal house price appreciation, resulting in a 4.8 percent improvement in affordability relative to one year ago,” Fleming continued. “Yet, all real estate is local and affordability dynamics can vary greatly at the market level … In June, the RHPI increased in 35 of the 44 markets we track year-over-year, meaning affordability declined in each.”  

Vermont led the states with greatest year-over-year RPHI at 10.6%followed by New Mexico at 10.3%) and Montana at 9.4%), while Louisiana recorded the greatest decrease with a 10.1drop. Among the nation’s major metro areas, New York City had the greatest year-over-year RPHI increase at 29.3% and Las Vegas had the greatest decrease with a 25.6% plummet.