GlobeSt.com: Given what we know about affordability and rising interest rates, what direction do you think home sales will take over the next several months?

Fleming: Even though affordability will be reduced modestly relative to last year, our analysis continues to show that in most markets the median income household can afford to buy more than the median-priced home. Because of that, demand will remain strong and the overall pace of home sales will likely still rise.

GlobeSt.com: What is your overall view of the affordability scenario currently since there was a slight month-over-month uptick, but year-over-year declines?

Fleming: I tend to focus on the longer trends. Monthly changes are sensitive to the changes in mortgage rates, but the longer, year-over-year trend is a much better directional signal.

GlobeSt.com: Will the spring and summer give home sales the boost they're not getting from high prices and increasing interest rates?

Fleming: Yes, because that's typically when buyers show up. The question will be, how willing sellers are to list their homes and provide the inventory, and then become buyers themselves.

GlobeSt.com: What else should our readers take away from your Real House Price Index?

Fleming: I believe that consumer house-buying power-adjusted price indices, like our RHPI, provide a much better view of the actual affordability level of housing than nominal prices alone. While rising nominal home prices are important to consider, the RHPI additionally accounts for growing incomes and interest-rate changes to measure how housing affordability is changing.

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IRVINE, CA—Home-purchase demand will remain strong, and the overall pace of home sales will likely still rise even though affordability will be reduced modestly relative to last year, First American Financial Corp.'s chief economist Mark Fleming tells GlobeSt.com. According to the firm's recent Real House Price Index, there has been a modest month-over month change in real house prices as well as a significant increase in real house prices year-over-year.

Based on the data, Fleming notes a modest month-over-month uptick in affordability. “Real purchasing-power adjusted house prices declined 0.1% in January, since mortgage rates did not meaningfully change and income growth continued. Despite the monthly increase in affordability and continued strong wage growth, homes are less affordable across the country compared to a year ago.”

He also commented on broad year-over-year what is seemingly the converse: declines in affordability. “Almost half of the markets we track saw double-digit affordability declines in January, compared with a year ago. The low inventory of homes for sale across much of the country is creating increased competition and setting the stage for a very robust sellers' market this spring,” says Fleming. “While affordability is lower compared to a year ago, the level of affordability in most markets is still high by historical standards, which is why demand is expected to remain strong this spring.”

We spoke with Fleming about the home-affordability outlook for the year and how it might affect sales.

GlobeSt.com: Given what we know about affordability and rising interest rates, what direction do you think home sales will take over the next several months?

Fleming: Even though affordability will be reduced modestly relative to last year, our analysis continues to show that in most markets the median income household can afford to buy more than the median-priced home. Because of that, demand will remain strong and the overall pace of home sales will likely still rise.

GlobeSt.com: What is your overall view of the affordability scenario currently since there was a slight month-over-month uptick, but year-over-year declines?

Fleming: I tend to focus on the longer trends. Monthly changes are sensitive to the changes in mortgage rates, but the longer, year-over-year trend is a much better directional signal.

GlobeSt.com: Will the spring and summer give home sales the boost they're not getting from high prices and increasing interest rates?

Fleming: Yes, because that's typically when buyers show up. The question will be, how willing sellers are to list their homes and provide the inventory, and then become buyers themselves.

GlobeSt.com: What else should our readers take away from your Real House Price Index?

Fleming: I believe that consumer house-buying power-adjusted price indices, like our RHPI, provide a much better view of the actual affordability level of housing than nominal prices alone. While rising nominal home prices are important to consider, the RHPI additionally accounts for growing incomes and interest-rate changes to measure how housing affordability is changing.