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Is the ‘Great House Price Moderation’ Here?

A new blog post [1] by Mark Fleming [2], the Chief Economist at First American Financial Corporation [3] discusses the findings of the latest Real House Price Index [4] (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: 

June 2022 Real House Price State Highlights 

June 2022 Real House Price Local Market Highlights