The September 2022 First American Real House Price Index (RHPI) was up 60.6% annually, demonstrating a “rapid decline in affordability.” The decline was driven by two factors—a 13.5% annual increase in nominal house prices and a 3.2% increase in the average 30-year, fixed mortgage rate from last year. 

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.

“Even though household income increased 3.1% since September 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,” said Mark Fleming, chief economist at First American. 

Fleming said that as buyers leave the market, nominal house price appreciation has slowed after peaking in March at nearly 21%. It has since decelerated by approximately 7 percentage points to 13.5% in September.

But there are also many markets where annual price growth isn’t just slowing, but prices are downright falling—and poised to fall further. Still, the drops aren’t likely to impact equity gained during the pandemic, Fleming said.

“At a high level, there’s reason to suspect tech layoffs will put some downward pressure on prices in both the for-sale and rental markets,” Rob Warnock, a senior research associate with Apartment List, told The Hill. 

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