Affordability Improves Amid Year-Long Slide in National House Price Appreciation
In February 2025, U.S. housing affordability improved modestly, driven by a slowdown in national house price appreciation and positive income growth. According to First American’s Real House Price Index (RHPI), affordability increased by 1.6% over January and 0.6% year-over-year. While mortgage rates in February were slightly higher than a year ago, the deceleration in house price growth contributed to the overall improvement in affordability.
The inventory of homes for sale continues to rise, moving closer to historical norms. This increase in supply, coupled with ongoing affordability challenges, has led to a cooling of price appreciation nationally. As of February, house prices have dipped below their respective peaks in 47 of the top 50 markets tracked by First American, an increase from 37 markets in the spring of the previous year. Notably, markets like Austin, Texas, and San Francisco have experienced significant price declines from their peaks, with Austin’s prices down 10.7% since May 2022 and San Francisco’s down nearly 10% since April 2022. Despite these declines, substantial equity gains from the pandemic-era housing boom remain in many markets.
