Six Cities Leading Shift toward a Buyers’ Market

SANTA ANA, Calif.–First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the February 2019 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels.Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

February 2019 Real House Price Index

  • Real house prices decreased 0.4 percent between January 2019 and February 2019.
  • Real house prices increased 2.9 percent year over year.
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 1.0 percent between January 2019 and February 2019, and increased 2.4 percent year over year.
  • Average household income has increased 2.8 percent since February 2018 and 55.0 percent since January 2000.
  • Real house prices are 14.0 percent less expensive than in January 2000.
  • While unadjusted house prices are now 2.3 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 39.0 percent below their 2006 housing boom peak.

Chief Economist Analysis: Market Dynamics Shifting Toward Home Buyers

“Throughout 2018, consistent growth among three driving forces – mortgage rates, household income and unadjusted house prices – defined the housing market. These three factors are also the core elements of the Real House Price Index (RHPI),” said Mark Fleming, chief economist at First American. “While household income rose steadily in 2018, rising mortgage rates offset any affordability benefit for home buyers, as illustrated by 11.1 percent year-over-year growth in the RHPI. However, the first quarter of 2019 has been friendly to potential home buyers, as declining mortgage rates, ongoing household income growth and moderating unadjusted home prices has boosted affordability.”

Market Dynamics Shifting Toward Home Buyers

“In February, mortgage rates fell 0.9 percentage points compared with the previous month and were only 0.04 percentage points higher than one year ago. Flat mortgage rates are a welcome change for home buyers following 2018 and the 2.8 percent year-over-year growth in household income helped boost affordability,” said Fleming. “The result? House-buying power increased 2.4 percent in February compared with one year ago, and 1 percent compared with last month.

“Additionally, while unadjusted house price appreciation in February persisted, the pace of appreciation slowed to 5.4 percent, compared with the 7.1 percent year-over-year growth in February 2018. As a result, real house price appreciation fell to 2.9 percent, the slowest year-over-year pace since December 2017,” said Fleming.

Six Cities Where Affordability Increased

“While we know that rising household income and a decline in mortgage rates caused real house price appreciation to slow nationally, real house prices declined in a few markets,” said Fleming. “Compared with a year ago, six cities saw year-over-year declines in the RHPI, signaling an improvement in affordability.”

  1. San Jose, Calif. (-5.5 percent)
  2. Seattle (-4.5 percent)
  3. San Francisco (-2.1 percent)
  4. Los Angeles (-1.6 percent)
  5. Portland, Ore. (-1.1 percent)
  6. San Diego (-0.3 percent)

Supply Surge

“These coastal markets all have something in common: they were the tightest and hottest markets of 2018. In the first half of 2018, rising millennial demand amid a backdrop of limited inventory and increasing mortgage rates put pressure on affordability, causing buyers to take a step back,” said Fleming. “But now, affordability is on the rise and the main reason is rising inventory.

“According to First American calculations of February 2019 data, the number of listings in San Jose, Seattle and San Francisco increased 124 percent, 89 percent and 52 percent respectively compared with one year ago,” said Fleming. “As inventory enters the market, buyers have more options, bidding wars are less likely, and sellers are more likely to reduce list prices. In fact, these three markets experienced the greatest yearly growth in the number of listings with price reductions.”

Softening Sellers’ Markets

“These six markets may signal a broader shift in the housing market. Across the nation, home buyers are benefiting from lower-than-anticipated mortgage rates, rising wages and a slowdown in unadjusted house price appreciation,” said Fleming. “Only the six markets above showed a year-over year decline in the RHPI, but 37 out the 44 top markets that we track showed month-over-month declines in the RHPI in February.

“However, while these trends help home buyers, it’s too soon to call it a buyers’ market. Unadjusted house prices are still rising and it’s clear that demand continues to outstrip supply in most markets,” said Fleming. “Data on the movement of unadjusted house prices during the early spring home-buying season won’t be available for a few more months, but it’s quite likely that price appreciation will accelerate again.”

February 2019 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: New Hampshire (+8.1 percent), Wisconsin (+7.8 percent), Rhode Island (+6.5 percent), Ohio (+6.0 percent), and Georgia (+6.0 percent).
  • The five states with the greatest year-over-year decrease in the RHPI are: Wyoming (-6.2 percent), Louisiana (-2.4 percent), Alabama (-2.0), Oklahoma (-1.5 percent), and North Dakota (-1.5 percent).

February 2019 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: Columbus, Ohio (+8.6 percent), Providence, R.I. (+8.4 percent), Milwaukee (+7.8 percent), Atlanta (+7.4 percent), and Cincinnati (+7.1 percent).
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year decrease in the RHPI are: San Jose, Calif. (-5.5 percent), Seattle (-4.5 percent), San Francisco (-2.1 percent), Los Angeles (-1.6 percent), Portland, Ore. (-1.1 percent).

Next Release

The next release of the First American Real House Price Index will take place the week of May 27, 2019 for March 2019 data.



The methodology statement for the First American Real House Price Index is available at


Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2019 by First American. Information from this page may be used with proper attribution.

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $5.7 billion in 2018, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2019, First American was named to the Fortune 100 Best Companies to Work For® list for the fourth consecutive year. More information about the company can be found at

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