Housing affordability continued to improve on a monthly and annual basis in November as homebuyer purchasing power made notable gains, according to new figures published Tuesday by title insurance giant First American Financial Corp.
An update to the company’s real home price index (RHPI), which measures home price appreciation relative to changes in homebuyers’ purchasing power, showed prices slipped 0.4% over the month in November to land 8.5% lower from a year earlier.
The decline in the RHPI was triggered by notable gains in house-buying power — how much house consumers can afford to buy — which First American estimates increased by $36,000 over the year in November, boosted by rising incomes and falling mortgage rates.
But improvement or deterioration in 2026 housing inventory remains what First American described as “the decisive wild card” for this year’s housing market due to its impact on reshaping purchase affordability across the market, independent of incomes and rates.
“Gradual life event-driven market re-engagement should support more inventory and more home sales transactions,” said Mark Fleming, chief economist at First American, in Tuesday’s report. “As long as inventory levels don’t deteriorate dramatically because more buyers than sellers enter the market, house price growth will remain in check.”
According to listings platform Realtor.com, national U.S. home inventory — which accounts for all active property listings and those with pending contracts — remained 12.5% below typical 2017 to 2019 levels in December.
Homebuyer demand proved more cautious than many sellers anticipated in 2025, causing a wave of sellers to delist their properties in the latter half of the year. Cautious homebuying demand reflects purchase affordability that remains roughly 63% below its pre-pandemic, five-year average, according to First American.
“For the eighth consecutive month, income growth outpaced house price growth, steadily increasing affordability,” said Tuesday’s RHPI report.
Shaky job conditions that consistently weighed on consumers’ economic outlooks in November were also gradually building up better affordability for borrowers. Private-sector hourly wage growth rose 3.6% annually in November, according to government data, compared to 2.7% growth in consumer inflation and 0.5% nominal home price growth.
“Income growth alone increased house-buying power by roughly $13,100,” said First American’s report, with another $23,500 lift in purchasing power stemming from mortgage rates that were about 0.57% lower in November than a year earlier.
While economic attitudes remain broadly negative for a swath of U.S. consumers at the start of 2026, purchasing power in the housing market has durably swung in favor of homebuyers. First American says November marked the ninth consecutive month of improving homebuyer affordability, “reaching its strongest level since the summer of 2022.”
