Home affordability is improving in the US but still down compared to a year ago
Home affordability in the United States improved in the third quarter of 2017 in 60% of counties but it is still worse than it was a year ago in 79% of them, new research shows.
Those seeing an improvement include Los Angeles, Cook County in Chicago, Harris County in Houston, Maricopa County in Phoenix, and San Diego but home affordability fell in Wayne County in Detroit, Middlesex County in Boston and Suffolk, Bronx and Westchester in New York.
The national home affordability index from property database ATTOM Data Solutions was 100 in the third quarter of 2017, the lowest national affordability index since the third quarter of 2008, when the index was 86. An index of 100 means the share of average wages needed to buy a median priced home nationwide is on par with historic averages.
‘Falling interest rates in the third quarter provided enough of a cushion to counteract rising home prices in most U.S. markets and provide at least some temporary relief for the home affordability crunch,’ said Daren Blomquist, senior vice president at ATTOM Data Solutions.
‘More sustainable relief for the affordability crunch, however, will need to be some combination of slowing home price appreciation and accelerating wage growth. Wage growth is outpacing home price growth in about half of all local markets so far this year, an indication that a more sustainable affordability pattern is taking shape in more local markets,’ he added.
The research also shows that annual wage growth is outpacing home price growth in 48% of markets, down from 53% in the second quarter of 2017 and down from 50% in the first quarter of the year. It is the first time since the first quarter of 2012 that at least half of all markets saw wage growth outpacing home price growth. Since bottoming out nationwide in the first quarter of 2012, median home prices have risen 73% while average weekly wages have increased 13% over the same period.