Affordability continues to slip across the U.S., falling even further from last year as home prices continue to rise and mortgage rates increase, according to a joint report from the National Association of Realtors and realtor.com.
The report showed that housing affordability is down from a year ago, and fewer households can afford the active inventory of homes for sale based on their income.
Using data on mortgages, state and metro area-level income and listings on realtor.com, the Realtors Affordability Distribution Curve and Score is designed to examine affordability conditions at different income levels for all active inventory on the market.
A score of one or higher generally suggests a market where homes for sale are more affordable to households in proportion to their income distribution.
These markets include Hawaii, with an affordability score of 0.52, California at 0.57, Oregon at 0.6 and the District of Columbia, Montana and Rhode Island all at 0.64.
In these areas, a median income-earning household could afford about 54% to 62% of the active housing inventory.
However, 14 states, including some of the least affordable states, showed an improvement in affordability since last year.
The greatest increase in affordability was in the District of Columbia, which rose from 0.59 to 0.64, followed by Vermont which increased from 0.81 to 0.84, Hawaii from 0.5 to 0.52 and North Dakota from 0.95 to 0.97.
“More balanced supply and demand dynamics have kept listing price growth below the national average, providing some much needed relief for stretched home buyers in these areas.” NAR explained that while wages are increasing, so are home prices.
Yun explained what can be done to combat the rising affordability issues.