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26 MEDIAN HOUSEHOLD INCOME INCREASES 5% First American Financial Corporation, a provider of title, settlement, and risk solutions for real estate transactions and the leader in the digital transformation of its industry, has released the April 2022 First American Real House Price Index (RHPI). e 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 Increase Nearly 45.6% "In April 2022, the RHPI jumped up by 45.6% compared with a year ago, accelerating faster than any other point in the 30-year history of the series," said Mark Fleming, Chief Economist at First American. "is rapid annual decline in affordability was driven by two factors: a 21.2% annual increase in nominal house prices and a 1.9 percentage point increase in the average 30-year, fixed mortgage rate compared with one year ago. "For homebuyers, there are few options to mitigate the loss of affordability caused by the increase in mortgage rates and home prices. One way to offset the decline in affordability is with an equivalent, if not greater, increase in household income," Fleming said. "Household income increased 5.0% since April 2021 and boosted consumer house-buying power, but even the strong year-over-year income growth was not enough to offset the affordability loss from higher rates and fast-rising nominal prices. Alternatively, another option for home buyers to mitigate the loss of affordability is to switch to an adjustable-rate mortgage with a lower rate than the fixed-rate benchmark. In fact, the share of adjustable-rate mortgages relative to fixed- rate mortgages has grown as mortgage rates have increased in recent months. "In April, affordability on both a year- over-year and month-over-month basis declined at its fastest pace in the series' history," Fleming said. "However, real estate is local and house-buying power and nominal house prices vary by city, so it's helpful to know where affordability is declining the most and the least." e Five Cities Where Affordability Declined the Most and the Least "Affordability declined year over year in all of the 50 markets we track in April. Mortgage rates increased 1.9 percentage points relative to one year ago, which reduces affordability, all else held equal. Higher mortgage rates decrease affordability equally in each market as mortgage rates are generally similar across the country," Fleming said. "However, household income growth and nominal house prices vary by market, creating the geographic variance in affordability. Faster nominal house price appreciation can erode, or even eliminate, the boost in affordability from higher household income." Journal