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Is the ‘Great House Price Moderation’ Here?

A new blog post by Mark Fleming, the Chief Economist at First American Financial Corporation discusses the findings of the latest Real House Price Index (RHPI) covering June 2022 which saw a moderating of prices across the board. 

Specifically, the RHPI jumped 53.3% year-over-year from June 2021; this number set an index record as it was the fifth month in a row for fastest year-over-year growth in the history of the report. This rapid annual decline was partly driven by the 18.5% increase in home prices and a 2.5 percentage point increase in mortgage rates. 

Additionally, affordability woes are causing buyers to pull out of the market, leaving those in the race with more options which has caused home price appreciation to moderate. Nationally, annual house price growth peaked in March at nearly 21%, but has since decelerated slightly to a still robust 18.5% in June. 

First American has now called this “The Great House Price Moderation” as all of the top-50 real estate markets saw prices pull back from their peaks. For example, Sacramento, California, price appreciation peaked in July 2021 at 23.5%, but this number has slowed to 10.8% as of June 2022. 

“The record-breaking house price appreciation nationwide and across markets in 2021 and early 2022 was due to a supply and demand imbalance—too much demand, too little supply,” Fleming wrote. “There remains a structural and long-term national supply shortage in the housing market, but in some cities the pullback in demand is strong and inventory is rising faster, resulting in a greater moderation of house price growth.” 

June 2022 Real House Price Index by the numbers: 

  • Real house prices increased 3.7% between May 2022 and June 2022. 
  • Real house prices increased 53.3% between June 2021 and June 2022. 
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, decreased 2.8% between May 2022 and June 2022, and decreased 22.7% year over year. 
  • Median household income has increased 4.7% since June 2021 and 72.5% since January 2000. 
  • Real house prices are 32.9% more expensive than in January 2000. 
  • While unadjusted house prices are now 54.8% above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 6.4% below their 2006 housing boom peak. 

June 2022 Real House Price State Highlights 

  • The five states with the greatest year-over-year increase in the RHPI are: Florida (+75.6%), South Carolina (+63.7%), Georgia (+61.6%), North Carolina (+61.5%), and Arizona (+60.2%). 
  • There were no states with a year-over-year decrease in the RHPI.

June 2022 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: Tampa, Fla. (+70.6%), Charlotte, N.C. (+69.8%), Raleigh, N.C. (+69.6%), Miami (+68.4%) and Orlando (+66.4%). 
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, there were no markets with a year-over-year decrease in the RHPI. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected]
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