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First American: House-buying power still strong

Consumers have lost on average about $19,000 in home-buying power over the year through August due to rising home prices and interest rates, according to First American Corp.

Rising wages, though, have helped ease the pressure on affordability, the company said.

First American’s real house price index rose by 11.3 percent year over year in August. The index factors in changes in interest rates and wages.

Buyers lost a total of $30,000 in house-buying power through a roughly 6 percent unadjusted annual gain in prices and a 0.7 percent jump in rates, but gained back $11,000 via an average 3.2 percent boost in wages, the company said.

“While the negative effect of rising mortgage rates is outpacing the benefit of rising incomes, consumer house-buying power continues to be strong because mortgage rates remain near historic lows,” First American Chief Economist Mark Fleming said. “Between the peak of unadjusted house prices in 2006 and August 2018, the average 30-year, fixed-rate mortgage fell from 6.8 percent to 4.6 percent.” 


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