First American: National House Price Growth Stabilizes in Low Single Digits

(Photo: Michael Tucker)

Annual house price appreciation remained below 1% for the fourth consecutive month during November, according to First American Data & Analytics, Santa Ana, Calif.

“House price growth has stabilized in the low single digits as the market adjusts to a new normal for mortgage rates and a constrained affordability environment,” said Mark Fleming, chief economist at First American.

Fleming noted the “new housing market normal” is characterized by minimal price appreciation and outright decline in some regions. “Slower price growth offers buyers a bit of affordability breathing room in the near term, and with wage growth exceeding house price growth, affordability is poised to continue slowly improving,” he added.

First American segments home price changes at the metropolitan level into three price tiers based on local market sales data: starter tier, which represents home sales prices at the bottom third of the market price distribution; mid-tier, which represents home sales prices in the middle third of the market price distribution; and luxury tier, which represents home sales prices in the top third of the market price distribution.

“When it comes to house price appreciation, where the home is matters as local market performance varies widely. Among the top 30 markets we track, markets with annual price declines outnumber markets with annual price growth,” Fleming said. “Notably, there is a growing divide in price appreciation between markets in the Rust Belt and Sun Belt. In markets where potential first-time buyers can still find relatively affordable homes — including parts of the Midwest and Northeast, such as Pittsburgh and St. Louis — price resilience is more evident. But, in markets where affordability has been stretched, such as Miami and Denver, higher inventory combined with strained household budgets has contributed to falling prices.”