Housing affordability improved in many of the real estate markets the third quarter of 2017. This clearly is good news, as the average price trend has eased or in some cases gone down, according to ATTOM Data Solutions’ 
multi-sourced property database.
Home prices have continued to increase, but annual wage growth outpaced home price appreciation in 48% or 193 of the 406 counties studied for the third quarter of 2017. This is down from 53% of counties during the second quarter of 2017 and from 50% of counties in the third quarter of 2016.
According to ATTOM’s recent findings, “Affordability improved from the second quarter in 60% of the 406 counties analyzed in the report, however, while 2017 might be beginning to cool, it is still down from last year in 79% of markets.”
One of the primary reasons for home affordability becoming a problem for purchasers is that inventory continues to evaporate, forcing buyers to pay more for what they could have purchased for a lower price just a year ago.
ATTOM’s most recent report put its national home affordability index at 100 in the third quarter. This represents the lowest level since the third quarter of 2008. An index of 100 means the share of average wages needed to buy a median-priced home nationwide in Q3 2017 is on par with historic averages.
The ATTOM Home Affordability Index is an analysis of:
The median home prices
From publicly recorded sales data
From the average wage data from the U.S. Bureau of Labor Statistics in 406 U.S. counties
Total population covered by the study is 212 million.
The affordability index is based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a 3% down payment, including property taxes, home insurance and mortgage insurance.
The ATTOM study found that wage growth is outpacing home price growth in about half of all local markets in 2017, thus indicating that moving forward there appears to be a more sustainable affordability pattern taking shape.
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