Housing affordability in June dropped for the fourth consecutive month. Price growth topped a 16-year record, according to First American.
Home Price Growth Hit +19% y/y in June
Here are a couple of statistics to get under your belt:
- The Real House Price Index (RHPI that measures home buyer affordability came in at +11.6% y/y and +1.9% m/m in June. The higher the RHPI, the worse the home buyer affordability.
- Home prices grew +19% y/y in June. This +19% jump beat an annual record high of +17.5% in 2005.
- Home values are now +32% higher than at the peak of the 2006 housing boom.
Additional Data to Pay Attention To
- The median household income in June rose to $73,793 from $73,698 monthly and $70,737 annually.
- Mortgage rates remained at an average of 3% in June
- Purchasing power hit $508,290 in June 2021. This buying power represents an increase of +129% higher than 2006 levels.
(All of the above data points come according to First American Chief Economist Mark Fleming.)
Rapid Price Appreciation Spurred by Demand
Fleming said, “The rapid house price appreciation in today’s housing market is largely the result of historic supply shortage relative to strong demographically driven demand that is supported by traditional mortgage products with tighter underwriting.”
(This demand surge is in contrast to the mid-2000s rapid price growth that was fueled by inadequate lending standards and open access to mortgage financing.)
Fleming argues that all booms are not followed by busts. He believes that any declines from this current boom ought to be moderate as well as gradual because market fundamentals are strong.
States with Strongest and Weakest RHPI Gains
Arizona was the leading state regarding RHPI gains in June with an annual RHPI increase of +23.3%. Vermont placed second with +21.4% followed by Nevada with +20.9% and Connecticut with +19.2% y/y.
On the other end of the spectrum, Louisiana had the lowest RHPI growth at +3.4%. North Dakota followed Louisiana at 5.5% and Virginia at 6.1% y/y in June.
Thanks to First American.
