House Prices Decline, but Equity Buffers Remain Robust, According to First American Real House Price Index

—Even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all the equity they have gained, says Chief Economist Mark Fleming—

First American Financial Corporation (NYSE: FAF), a premier provider of title, settlement and risk solutions for real estate transactions and the leader in the digital transformation of its industry, today released the September 2022 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 at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

Chief Economist Analysis: Real House Prices Increased 10.5 Percent Month Over Month

“In September 2022, the RHPI jumped up by 60.6 percent on an annual basis. This rapid annual decline in affordability was driven by two factors – a 13.5 percent annual increase in nominal house prices and a 3.2 percentage point increase in the average 30-year, fixed mortgage rate compared with one year ago. Even though household income increased 3.1 percent since September 2021 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher mortgage rates and fast-rising nominal prices,” said Mark Fleming, chief economist at First American. “As affordability wanes and prompts buyers to pull back from the market, nominal house price appreciation has slowed. Nationally, annual nominal house price growth peaked in March at nearly 21 percent but has since decelerated by approximately 7 percentage points to 13.5 percent in September.

“But real estate is local, and there are markets where annual price growth isn’t just slowing, but prices are falling from recent peaks,” said Fleming. “Nominal house prices in many markets are poised to fall further as the hot sellers’ market of the pandemic turns in favor of buyers, but not all that was gained in the pandemic will necessarily be lost.”

Not All that was Gained Will be Lost

“The pandemic housing market was unprecedented in multiple ways. The housing market was already strong prior to 2020, yet the pandemic redefined the role of a home, creating a surge in demand. As work-from-home became the new normal, a house was no longer just a dwelling or a vehicle for wealth creation, but also an office, a classroom, a daycare and even a gym. The broadening role of the home in American life, coupled with record-low mortgage rates and limited housing supply, powered the housing market to multiple records during this unprecedented time -- the fastest annual house price appreciation, the lowest days on market in the history of record-keeping, and a near-record annualized pace of sales,” said Fleming. “Yet, the pandemic housing market was the exception, not the norm. Double-digit house price growth was not sustainable in the long run. As the saying goes, what goes up, must ‘eventually’ come down. Sellers may be anchored to yesterday’s prices, but buyers won’t buy unless sellers adjust prices down to meet the affordability-constraining reality of higher mortgages rates. Sellers are beginning to recognize this and price cuts are becoming more common.

“Nominal house prices declined in September from their recent peaks in 15 of the top 50 markets we track. The market with the biggest decline was San Francisco, where nominal house prices peaked in March 2022, but have since declined by 6.8 percent as the housing market rebalances,” said Fleming. “San Jose follows closely behind, as nominal house prices have declined 5.9 percent from the recent peak in April 2022.

“While prices are declining from the peak in these markets, much of the equity homeowners gained during the pandemic remains. For example, in both San Francisco and San Jose, house prices increased 29 percent from February 2020 to their respective peaks in 2022,” said Fleming. “House price declines would have to be substantial to eat away at all of the equity that many homeowners have accumulated over the last few years.”

Rebalancing is Healthy

“House-buying power has declined by $145,500 compared with one year ago, primarily due to higher mortgage rates. Affordability will likely remain a drag on the housing market until house-buying power recovers as house prices decline. House prices have already begun to adjust to the reality of higher mortgage rates in many markets, which will help bring more balance to the housing market heading into 2023,” said Fleming. “Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”

September 2022 Real House Price Index Highlights

  • Real house prices increased 10.5 percent between August 2022 and September 2022.
  • Real house prices increased 60.6 percent between September 2021 and September 2022.
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, decreased 8.9 percent between August 2022 and September 2022, and decreased 29.3 percent year over year.
  • Median household income has increased 3.1 percent since September 2021 and 77 percent since January 2000.
  • Real house prices are 38.1 percent more expensive than in January 2000.
  • While unadjusted house prices are now 55.4 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 2.5 percent below their 2006 housing boom peak.

September 2022 Real House Price State Highlights

  • The five states with the greatest year-over-year increase in the RHPI are: Florida (+78.3), Georgia (+66.9), Arkansas (+65.8), South Carolina (+64.9 percent), and Alabama (+64.7 percent).
  • There were no states with a year-over-year decrease in the RHPI.

September 2022 Real House Price Local Market Highlights

  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are: Miami (+82.5 percent), Tampa, Fla. (+73.4 percent), Indianapolis (+70.4 percent), Nashville, Tenn. (+69.6), and Orlando, Fla. (+69.3 percent).
  • Among the Core Based Statistical Areas (CBSAs) tracked by First American, there were no markets with a year-over-year decrease in the RHPI.

Next Release

The next release of the First American Real House Price Index will take place the week of December 26, 2022 for October 2022 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. © 2022 by First American. Information from this page may be used with proper attribution.

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 $9.2 billion in 2021, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2022, First American was named one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine for the seventh consecutive year. More information about the company can be found at


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Marcus Ginnaty

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First American Financial Corporation

(714) 250-3298

Investor Contact:

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Investor Relations

First American Financial Corporation

(714) 250-5214

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