A measure of US house prices which takes into consideration the impact of income and interest rate changes continues to rise
A measure of US house prices which takes into consideration the impact of income and interest rate changes continues to rise.
The First American Financial Corp’s Real House Price Index for March was up 0.7% from a month earlier and 11.5% from March 2016. It also reveals that consumer-buying power – how much one can buy based on changes in income and interest rates - fell 0.4% month-over-month and 5.2% year-over-year.
With tight inventory putting upward pressure on prices, First American’s chief economist Mark Fleming says that millennial demand is particularly strong but many sellers are cautious.
“The market faces a ‘prisoner’s dilemma.’ If everyone sells, the supply squeeze would ease. However, homeowners may not be putting their homes on the market because they’re wary of the risk of selling when others don’t – the inability to find another home to purchase at the right price,” he said.
Tight supply is stifling sales but Fleming says affordability is being helped by other conditions.
“Wages continue to move higher, growing at an annual pace of 2.7% in March 2017, as the labor market continued to improve. Wage growth has helped to offset the impact that higher mortgage rates and increasing house prices are having on home affordability,” Fleming explained.
The First American Financial Corp’s Real House Price Index for March was up 0.7% from a month earlier and 11.5% from March 2016. It also reveals that consumer-buying power – how much one can buy based on changes in income and interest rates - fell 0.4% month-over-month and 5.2% year-over-year.
With tight inventory putting upward pressure on prices, First American’s chief economist Mark Fleming says that millennial demand is particularly strong but many sellers are cautious.
“The market faces a ‘prisoner’s dilemma.’ If everyone sells, the supply squeeze would ease. However, homeowners may not be putting their homes on the market because they’re wary of the risk of selling when others don’t – the inability to find another home to purchase at the right price,” he said.
Tight supply is stifling sales but Fleming says affordability is being helped by other conditions.
“Wages continue to move higher, growing at an annual pace of 2.7% in March 2017, as the labor market continued to improve. Wage growth has helped to offset the impact that higher mortgage rates and increasing house prices are having on home affordability,” Fleming explained.
