MReport July 2022

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M R EP O RT | 11 Real House Prices Increase Nearly 33% YoY With a 21.6% annual increase in nominal house prices, real house prices increased nearly 7% between February 2022 and March 2022, the fastest growth in the more than 30-year history of the series. F irst American Financial Corporation released the March 2022 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family prop- erties throughout the United States adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state, and metropolitan area lev- els. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability. "In March 2022, the Real House Price Index (RHPI) in- creased 32.5% year over year, which is the fastest growth in the more than 30-year history of the series. This rapid annual decline in affordability was driven by two factors: a 21.6% an- nual increase in nominal house prices and over a full percent- age point increase in the 30-year, fixed mortgage rate compared with one year ago," said Mark Fleming, Chief Economist at First American. "Even though household income increased 4.9% since March 2021 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher mortgage rates and fast-rising nominal prices. "Reduced affordability prompts some buyers to pull back from the market and sellers to adjust their price expectations. The housing market is slowing down by design as the Federal Reserve tightens monetary policy in order to tame inflation," Fleming said. "Early data signals the housing market is nor- malizing—our preliminary nominal house price index for the months of April and May indicates annual house price growth is decelerating. Historical data provides helpful perspective on how house prices react to rising mortgage rates." March 2022 Real House Price State Highlights The five states with the greatest year-over-year in- crease in the RHPI are: There were no states with a year-over-year decrease in the RHPI. March 2022 Real House Price Local Market Highlights Among the Core Based Statistical Areas (CBSAs) tracked by First American, the top five markets with the greatest year-over-year increase in the RHPI are: MDWELL Among the Core-Based Statistical Areas (CBSAs) tracked by First American, there were no markets with a year-over-year decrease in the RHPI. Florida (+46.7%) South Carolina (+46.1%) Georgia (+40.5%) Arizona (+39.7%) Idaho (+37.7%) Charlotte, North Carolina (+46.6%) Raleigh, North Carolina (+43.5%) Tampa, Florida (+43.3%) Phoenix (+42.0%) Jacksonville, Florida (+41.2%)

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