Report: Homes Are Getting Even Less Affordable

January 18, 2018

Nationwide housing affordability dropped again and is down compared to a year ago, the National Association of REALTORS® reports. Mortgage rates are higher than a year ago and the increase in borrowing costs is one culprit for higher payments among borrowers, as are higher home prices.

Mortgage rates are up 37 basis points from a year ago, while median family incomes rose 4 percent.

“Inventory conditions are very tight and that is not healthy for affordability,” NAR reports on its Economists’ Outlook blog. “Less inventory will cause rising home prices, which tend to benefit the homeowner and not the potential home buyer.”

The median sales price for a single-family home sold in November in the U.S. was $248,800, up 5.4 percent from a year ago.

The Midwest posted the largest increases in prices at 8.9 percent, NAR reports. The West saw an uptick of 7.7 percent and the South saw a 4.3 percent increase. The Northeast had the smallest price increase of all the major regions at 3.3 percent.

Nevertheless, all four regions saw a decrease in affordability compared to a year ago. The Midwest had the biggest drop of 8.8 percent, followed by the West with a 7.2 percent decrease, the South at 5.3 percent, and the Northeast at 2.6 percent, according to NAR’s Housing Affordability Index.

Still, the most affordable region in the U.S. is the Midwest, while the West remained the least affordable region, according to NAR’s index.

View a breakdown of housing affordability in your market.

Source: “November 2017 Housing Affordability Index,” National Association of REALTORS® Economists’ Outlook blog (Jan. 16, 2018)