U.S. Home Price Appreciation Sets New Record for Third Consecutive Month, Rising 20.7% Year-Over-Year

First American Financial Corporation, the Santa Ana, California-based provider of title insurance protection and settlement services for homebuyers and sellers, on Wednesday (10-27-21) released their August 2021 edition of the First American Real House Price Index (RHPI). The RHPI is a measure of the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rated changes on consumer housing-buying power — a measure of housing affordability.

Year-over-year the RHPI reports that the nominal price appreciation reached 20.7%, the third consecutive month it has set a record. Real house prices increased 1.2% between July 2021 and August 2021.

Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 0.5% between July 2021 and August 2021, and increased 3.5% year-over-year, according to the RHPI.

Median household income also reported an increase of 2.3% since August 2020, and 65.2% since January 2000.

In remarks prepared for the release of the RHPI, Mark Fleming, Chief Economist at First American said, “According to our RHPI, which measures housing affordability in the context of changes in consumer house-buying power, incorporating changes in household income, mortgage rates and nominal house prices, affordability declined 16.6%. The growth in nominal house prices vastly outpaced the 3.5% increase in house-buying power compared with a year ago, yet real, house-buying power-adjusted house prices remain 37.5% below their 2006 housing boom peak.”

The five states that experienced the greatest year-over-year increase in the RHPI are: Arizona at +27.8%, Nevada at +20.6%, Florida at +20.5%, Connecticut at +20.1% and Vermont at +19.8%. No state experienced a loss.