Market Overview

Foreign Monetary Stimulus a Positive for U.S. Consumer House-Buying Power, According to First American Real House Price Index


First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the June 2016 First American Real House Price Index (RHPI). 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 and across the United States at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

June 2016 Real House Price Index

For the month of June, the RHPI decreased slightly in June 2016, falling -0.2 percent compared to May 2016 and -0.1 percent compared to June 2015.

"Unadjusted house prices are expected to increase by 5.1 percent in June on a year-over-year basis," said Mark Fleming, chief economist at First American. "After adjusting for increased consumer house-buying power, real house prices are significantly lower than they were prior to the housing boom. Real house prices are 38.5 percent below their housing-boom peak in July 2006 and 17.3 percent below the level of prices in January 2000. Unadjusted, the national price level is 2.6 percent away from the housing-boom peak in 2007."

Foreign Monetary Stimulus a Positive for U.S. Consumer House-Buying Power

"The monetary stimulus and negative interest rate policies of several central banks outside the U.S. continue to drive demand for U.S. Treasury bonds as investors search for positive yields, despite abating concerns over the fallout from Brexit. As a result, the yields on U.S. Treasuries remain at depressed levels and are keeping U.S. mortgage rates at record low levels," said Fleming. "The 30-year, fixed-rate mortgage averaged 3.57 percent in June 2016. These historically low mortgage rates and surging house-buying power are contributing to gains in affordability that many people overlook."

June 2016 Real House Price State Highlights

  • The five states with the highest year-over-year increase in the RHPI are: Wyoming (+7.0 percent), Nevada (+4.8 percent), North Dakota (+4.6 percent), Michigan (+3.7 percent) and Delaware (+2.4 percent).
  • The five states with the highest year-over-year decrease in the RHPI are: Mississippi (-7.0 percent), New Jersey (-6.0 percent), Iowa (-5.8 percent), Nebraska (-5.6 percent) and North Carolina (-5.2 percent).

June 2016 Real House Price Local Market Highlights

  • Among the largest 50 Core Based Statistical Areas (CBSAs), the five markets with the highest year-over-year increase in the RHPI are: Jacksonville, Fla. (+10.3 percent), Tampa, Fla. (+6.5 percent), Charlotte, N.C. (+4.1 percent), Sacramento, Calif. (+3.5 percent), and Orlando, Fla. (+3.3 percent).
  • Among the largest 50 CBSAs, the five markets with the highest year-over-year decrease in the RHPI are: Virginia Beach, Va. (-4.9 percent), Oklahoma City (-3.4 percent), Washington, D.C. (-3.2 percent), San Francisco (-3.0 percent), and Milwaukee (-2.9 percent).

Affordability in Many Major Markets Continues to Improve in June

"Real house prices declined on a year-over-year basis in 27 of the 43 metropolitan areas tracked by First American, as increases in consumer house-buying power were sufficient to more than offset unadjusted price appreciation. Virginia Beach, Va., Oklahoma City, Washington and San Francisco led the pack in terms of real house price declines and improved affordability, each experiencing year-over-year declines of 3.0 percent or more," said Fleming. "Counter to the conventional wisdom that housing is becoming less affordable in these markets, many house-hunters reaped the benefit of improving affordability in June.

"The gains in affordability, caused by a combination of low mortgage rates and recent improvements in wage growth are helping the market reach its potential for home sales. Many markets that are often listed as the most expensive for housing are not as expensive as many believe when one accounts for the strong growth in household income within these markets," said Fleming. "For example, an increase in the estimated median household incomes in both Dallas and San Francisco were enough to offset house price gains, increasing consumer buying-power and bringing meaningful affordability improvements in real terms to both markets.

"Rising household incomes and falling mortgage rates strengthened consumer house-buying power and affordability in many major metropolitan markets in June," said Fleming. "Improving affordability for consumers often occurred in markets traditionally depicted as expensive or over-priced. Consumer buying-power-adjusted prices actually fell in these markets, thanks to rising incomes and low mortgage rates."

Next Release

The next release of the First American Real House Price Index will be on September 19, 2016 for July 2016 data.


The methodology statement for the First American Real House Price Index is available at


Opinions, estimates, forecasts and other views contained in this page are those of First American's Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American's business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2016 by First American. Information from this page may be used with proper attribution.

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. With revenues of $5.2 billion in 2015, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2016, First American was recognized by Fortune® magazine as one of the 100 best companies to work for in America. More information about the company can be found at

First American Financial Corporation
Media Contact:
Marcus Ginnaty, 714-250-3298
Corporate Communications
Investor Contact:
Craig Barberio, 714-250-5214
Investor Relations

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