A recent study from ATTOM Data Solutions, curator of the nation’s main property database, shows U.S. home prices in the first quarter were the least affordable they’ve been since 2008.
According to an ATTOM press release, the company calculates its affordability index based on the percentage of income needed to buy a median-priced home relative to historic averages. An index about 100 shows median home prices are more affordable than the historic average while an number below 100 means median home prices are less affordable than the historic average.
In the second quarter of 2018, ATTOM calculated the nation’s home affordability index of 95 was down from an index of 102 in the previous quarter and an index of 103 this time last year. It’s the lowest the index has been since the third quarter of 2008, when it sat at 86.
“Slowing home price appreciation in the second quarter was not enough to counteract an 11 percent increase in mortgage rates compared to a year ago, resulting in the worst home affordability we’ve seen in nearly 10 years,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile, home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective home buyers even without the rise in mortgage rates.”
The study also pointed out that home prices are rising faster than wages in 64 percent of local markets and that median home prices aren’t affordable for average wage earners in 75 percent of local markets.