S&P Global Ratings’ assessment of U.S. home price overvaluation fell roughly one percentage point to 14.3 percent as of fourth-quarter 2023, said a report published recently.
S&P Global Ratings has updated its home price overvaluation assessment and the related Federal Housing Finance Agency Home Price Index (FHFA HPI) inputs, based on fourth-quarter 2023 data. Our assessment fell slightly to 14.3 percent as per capita income growth outpaced home price appreciation (HPA). However, it is still comparable to our last reading, which was an overvaluation of 15.6 percent at the national level based on third-quarter 2023 data (see “U.S. Home Price Overvaluation Relatively Steady, But Bumps Up A Bit,” published Feb. 5, 2024). The non-seasonally adjusted All-Transactions FHFA HPI was close to flat (up 0.04 percent) between third- and fourth-quarter 2023, while the Purchase-Only Index decreased 0.29 percent on an unadjusted basis. Regional variation persists, however, and our assessment shows that about 89 percent of metropolitan statistical areas or divisions (which we refer to collectively as MSAs) are overvalued, consistent with our prior assessment.
We believe that the credit impact home price overvaluation could have on U.S. residential mortgage-backed securities (RMBS) will depend on the geographic distribution of the mortgage pools and the valuation dates of the underlying properties backing the loans in those pools.
For the full report, see “U.S. Home Price Overvaluation Softens As Wage Growth Outpaces Home Price Gains,” published April 15, 2024.
The report is available to RatingsDirect subscribers at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by sending an e-mail to [email protected]. Ratings information can also be found on S&P Global Ratings’ public website by using the Ratings search box at www.spglobal.com/ratings.
This report does not constitute a rating action.