U.S. home affordability improved overall during the third quarter compared with the fourth quarter but was worse off than it was in the third quarter of 2016 in a majority (79%) of counties, according to a recent report from ATTOM Data Solutions.
Homes were more affordable in 243 of 406 (60%) of counties analyzed in ATTOM’s home affordability index report, compared to the previous quarter, including Los Angeles County, Calif.; Cook County (Chicago), Ill.; Harris County (Houston), Texas; Maricopa County (Phoenix), Ariz.; and San Diego County, Calif.
Homes were less affordable in 163 of 406 (40%) of counties analyzed in the report, including Wayne County (Detroit), Mich.; Middlesex County (Boston), Mass.; along with three counties in the New York metro area: Suffolk, Bronx and Westchester.
Nationally, affordability reached its lowest point in the third quarter of 2008, according to ATTOM.
“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,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, ion a statement. “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.”
Currently, wage growth is, on average, outpacing home price growth in 48% of markets. As wage growth increases and home prices stabilize, affordability should improve.
However, there is still a long way to go before wage growth catches up with current home prices: ATTOM’s data shows that U.S. home prices have increased 73%, on average, since the first quarter of 2012. Meanwhile, wages increased only 13% during the same time period.