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Single-Family Home Prices Least Affordable Since 2008: Report

single family home prices
July 2018

Interested home-buyers are struggling nationwide to afford costs.

U.S. home prices in the first quarter of 2018 were at the least affordable level since Q3 2008, according to ATTOM Data Solutions’ Q2 2018 U.S. Home Affordability Report.

The report calculates an affordability index based on the percentage of income needed to buy a median-priced home relative to historic averages.

Nationwide, the Q2 2018 home affordability index of 95 was down from an index of 102 in the previous quarter and an index of 103 in Q2 2017 to the lowest level since Q3 2008, when the index was 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, Vice President at ATTOM Data Solutions. “Meanwhile home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective homebuyers even without the rise in mortgage rates.”

An index above 100 indicates median home prices are more affordable than the historic average and an index below 100 indicates median home prices are less affordable than the historic average. Other highlights:

Nationwide, the median home price of $245,000 in Q2 2018 was up 4.7 percent from a year, down from 7.4 percent appreciation in the first quarter but still above the average weekly wage growth of 3.3 percent. Since bottoming in Q1 2012, median home prices nationwide have increased 75 percent while average weekly wages have increased 13 percent during the same period.

Annual growth in median home prices outpaced average wage growth in 275 of the 432 counties analyzed in the report.

  • Counties with the lowest home affordability indexes in Q2 2018 were:

Genesee County (Flint), Mich. (70); Denver County (72); Adams County (Denver area) (73); Santa Fe County, N.M. (73); and Wilson County (Nashville area) (75).

  • Among 40 counties with a population of at least 1 million, those with the lowest home affordability indexes in Q2 2018 were:

Travis County (Austin) (77); Alameda County (San Francisco area) (81); Santa Clara County (San Jose) (82); Oakland County (Detroit area) (82); and San Francisco County (83).

  • Counties with median home prices requiring the highest share of average wage earner income were:

Marin County (San Francisco area) (133.2 percent); Kings County (Brooklyn) (123.1 percent); Santa Cruz County (121.5 percent); and Monterey County (Salinas) (100.3 percent).

  • Counties with median home prices requiring the lowest share of average wage earner income were:

Wayne County (Detroit) (13.5 percent); Clayton County, Ga. (13.7 percent); Rock Island (Quad Cities), Ill. (15.8 percent); Saginaw County, Mich. (16.4 percent); and Richmond County (Augusta), Ga. (16.4 percent).

Median home prices were not affordable for average wage earners in 75 percent of local markets.