Nationwide home prices during the second quarter of this year were the least affordable in nearly a decade, according to a report from ATTOM Data Solutions.
ATTOM’s affordability index is based on percentage of income needed to buy a median-priced home relative to historic averages. An index above 100 indicates median home prices are more affordable than the historic average. An index below 100 indicates median home prices are less affordable than the historic average.
During the second quarter, ATTOM’s home affordability index reached 95, down from an index of 102 in the first quarter and an index of 103 one year ago. The second-quarter affordability index reached its lowest level since the third quarter of 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,” ATTOM Senior Vice President Daren Blomquist said in a release. “Meanwhile home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective homebuyers even without the rise in mortgage rates.”
Nationwide the median home price was $245,000 during the second quarter, up 4.7 percent from a year ago. Median home prices nationwide have increased 75 percent while average weekly wages have increased 13 percent during the same period.
According to the report, the lowest home affordability indexes during the second quarter were in Genesee County (Flint), Mich. (70); Denver (72); Adams County, Colo. (73); Santa Fe County, N.M. (73); and Wilson County, Tenn. (75).
Nationwide, during the second quarter, an average wage earner would need to spend 31.2 percent of his or her income to buy a median-priced home, above the historic average of 29.6 percent.
ATTOM said the counties with median home prices that required the highest share of average wage earner income were Marin County (San Francisco area) (133.2 percent); Kings County (Brooklyn), N.Y. (123.1 percent); Santa Cruz County, Calif. (121.5 percent); Monterey County (Salinas), Calif. (100.3 percent); and San Francisco County (97.2 percent).
Counties with median home prices that requiring the lowest share of average wage earner income during the second quarter 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).
ATTOM identified five counties where an average wage earner could not afford to buy a median-priced home during the second quarter: Los Angeles County; Cook County (Chicago); Maricopa County (Phoenix); San Diego County; and Orange County, Calif.