“This rapid annual decline in affordability was driven by an 18.5 percent annual increase in nominal house prices and a 2.5 percentage point increase in the 30-year, fixed mortgage rate compared with one year ago,” First American Chief Economist Mark Fleming said in a release.
As housing affordability worsens, homebuyers are pulling away from the market, he said, reducing competition and causing annual house price appreciation to moderate.
“Nationally, annual house price growth peaked in March at nearly 21 percent but has since decelerated slightly to a still-robust 18.5 percent in June,” Fleming said. “However, the modest price deceleration is not a national phenomenon. While house price growth has slowed in all top 50 markets we track, the pace of moderation varies significantly by market.”
Sacramento, Calif., had the strongest deceleration year-over-year, from an annual house appreciation of 23.5 percent in July 2021 to 10.8 percent in July 2022. The market with the smallest gap was New York, holding steady at 13 percent from May 2021 to June 2022.
The market with the slowest annual pace of price appreciation in June was San Francisco, falling to 6.2 percent from 17.5 percent in July 2021, while the market with the fastest pace of appreciation was Miami at 33.8 percent, down slightly from 34.4 percent in May 2022.
“The record-breaking house price appreciation nationwide and across markets in 2021 and early 2022 was due to a supply and demand imbalance – too much demand, too little supply,” Fleming said. “There remains a structural and long-term national supply shortage in the housing market, but in some cities the pullback in demand is strong and inventory is rising faster, resulting in a greater moderation of house price growth.”
The five states with the greatest year-over-year increase in RHPI were Florida (+75.6), South Carolina (+63.7 percent), Georgia (+61.6), North Carolina (+61.5 percent), and Arizona (+60.2 percent).
There were no states with a year-over-year decrease in RHPI.
The five markets tracked by First American with the greatest year-over-year increase in RHPI were Tampa, Fla. (+70.6 percent), Charlotte, N.C. (+69.8), Raleigh, N.C. (+69.6 percent), Miami (+68.4 percent) and Orlando, Fla. (+66.4 percent). There were no markets with a year-over-year decrease.