Peak National House Price Appreciation May be Behind Us

02/22/2024 Hanna

December dip in mortgage rates may have pushed prices in many markets to new peaks, yet some markets remain well below prior peaks

SANTA ANA, Calif. – First American Data & Analytics, a leading national provider of property-centric information, risk management and valuation solutions and a division of First American Financial Corporation (NYSE: FAF), released its January 2024 Home Price Index (HPI) report. The report tracks home price changes less than four weeks behind real time at the national, state and metropolitan (Core-Based Statistical Area) levels and includes metropolitan price tiers that segment sale transactions into starter, mid and luxury tiers. The full report can be found here.

January House Price Index Highlights
The First American Data & Analytics’ non-seasonally adjusted (NSA) HPI showed that nationally in January[1] 2024:

Between December 2023 and January 2024 house prices increased 0.3 percent.
House prices increased 7.2 percent between January 2023 and January 2024.
House prices reached a new peak for the tenth month in a row in January 2024.
Annual house price growth peaked in December 2023 at 7.7 percent.

“The pace of annualized home price appreciation peaked in December, as buyers rushed to take advantage of falling mortgage rates. In January, the preliminary estimate of annualized appreciation cooled modestly by half a percent and is likely to slow down further in the coming months,” said Mark Fleming, chief economist at First American. “Despite concern that house prices could decline significantly at the beginning of 2023, rate-locked potential home sellers kept supply tight, maintaining pressure on prices. Optimism that mortgage rates will fall in 2024 may incent more homeowners to sell, boosting supply and, in turn, improving affordability for buyers. While more supply and improved affordability should cool post-pandemic hot house price appreciation, 2024 may still be the year that house price appreciation doesn’t get too cold, but closer to just right.”

The pace of annualized home price appreciation peaked in December, as buyers rushed to take advantage of falling mortgage rates. In January, the preliminary estimate of annualized appreciation cooled modestly by half a percent and is likely to slow down further in the coming months.” – Mark Fleming, Chief Economist, First American.

January 2024 House Price State[2] Highlights

The five most populous states experienced the following year-over-year growth in the HPI: Pennsylvania (+8.4 percent), Florida (+6.1 percent), Texas (+5.3 percent), California (+4.4 percent), and New York (+4.4 percent).
There were no states with a year-over-year decrease in the HPI.
Full 50-state HPI data is available here.

January 2024 House Price Local Market Highlights

Among the 30 Core-Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year increase in the HPI are: Nassau County, N.Y. (+10.7 percent), Anaheim, Calif. (+10.2 percent), Warren, Mich. (+9.6 percent), Miami (+9.4 percent), and Pittsburgh (+8.8 percent).
Among the 30 Core-Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, there were no markets with a year-over-year decrease in the HPI.
Data for the largest 30 CBSAs by population is available here.

“While house prices increased in all 30 markets tracked by our index over the last year, this rising tide hides the change in market prices since their peak. Measuring the price change in each market from their post-pandemic peak reveals that house prices are below their prior peaks in 23 of the top 30 markets. Notably, house prices are currently 6 percent or more below their prior peak in six markets, with the largest price declines from peak in Oakland (-13.5 percent), Austin, Texas (-9.9 percent), and Seattle (-9.2 percent).”

January 2024 Local Market Price Tier Highlights

The First American Data & Analytics HPI 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 the luxury tier, which represents home sales prices in the top third of the market price distribution.

Starter Tier: Among the 30 Core-Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year increase in the starter home HPI are: Nassau County, N.Y. (+17.8 percent), Warren, Mich. (+12.2 percent), New York (+10.9 percent), Cambridge, Mass. (+10.4 percent), and St. Louis (+9.0 percent).
Mid-Tier: Among the 30 Core-Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year increase in the mid-tier HPI are: Pittsburgh (+12.1 percent), Nassau County, N.Y. (+11.6 percent), Miami (+11.6 percent), Anaheim, Calif. (+10.1 percent), and Washington, D.C. (+8.4 percent).
Luxury Tier: Among the 30 Core-Based Statistical Areas (CBSAs) tracked by First American Data & Analytics, the five markets with the greatest year-over-year increase in the luxury HPI are: Miami (+12.0 percent), Anaheim, Calif. (+11.6 percent), Atlanta (+9.6 percent), Warren, Mich. (+8.8 percent), and Charlotte, N.C. (+7.4 percent).

Visit the First American Economic Center for more research on housing market dynamics.

Next Release

The next release of the First American Data & Analytics House Price Index will take place the week of March 18, 2024.

First American Data & Analytics HPI Methodology
The First American Data & Analytics HPI report measures single-family home prices, including distressed sales, with indices updated monthly beginning in 1980 through the month of the current report. HPI data is provided at the national, state and CBSA levels and includes preliminary index estimates for the month prior to the report (i.e. the preliminary result of July transactions is reported in August). The most recent index results are subject to revision as data from more transactions become available.

The HPI uses a repeat-sales methodology, which measures prices changes for the same property over time using more than 46 million paired transactions to generate the indices. In non-disclosure states, the HPI utilizes a combination of public sales records, MLS sold and active listings, and appraisal data to estimate house prices. This comprehensive approach is particularly effective in areas where there is limited availability of accurate sale prices, such as non-disclosure states. Property type, price and location data are used to create more refined market segment indices. Real Estate-Owned transactions are not included.

Disclaimer

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. © 2024 by First American. Information from this page may be used with proper attribution.

About First American Data & Analytics

First American Data & Analytics, a division of First American Financial Corporation, is a national provider of property-centric information, risk management and valuation solutions. First American maintains and curates the industry’s largest property and ownership dataset that includes more than 8 billion document images. Its major platforms and products include: DataTree^®, FraudGuard^®, RegsData^®, First American TaxSource™ and ACI^®. Find out more about how First American Data & Analytics powers the real estate, mortgage and title settlement services industries with advanced decisioning solutions at www.FirstAmDNA.com.

About First American
First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $6.0 billion in 2023, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2023, First American was named one of the 100 Best Companies to Work For by Great Place to Work^® and Fortune Magazine for the eighth consecutive year and was named one of the 100 Best Workplaces for Innovators by Fast Company. More information about the company can be found at www.firstam.com.