As home prices continue their ascent, affordability fell for four straight quarters, according to Attom Data Solutions.
The home affordability index for the fourth quarter dropped to 91. It represents decreases year-over-year from 106 and quarter-over-quarter from 94. The last time the index reached this low was the third quarter of 2008 when it hit 87.
The median home sales price was $241,250 in the fourth quarter, a 9% increase from a year ago, while the median annual wage of $56,381 only rose 3% from the previous year.
Despite the index dropping off nationwide, a granular look at local housing markets and income growth shows the glass half full.
“While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth,” Daren Blomquist, senior vice president at Attom, said in a press release.
On an individual basis, 76% of the 469 counties analyzed had affordability indexes below 100. However, affordability improved from last quarter in 58% of counties.
Wage growth outpaced home price appreciation in 22% of markets. Including some of the traditionally expensive ones.
“Affordability improved from the previous quarter in more than half of all local markets, and one in five local markets saw annual wage growth outpace annual home price appreciation, including high-priced areas such as San Diego, Brooklyn and Seattle,” Blomquist continued.
Attom bases its home affordability index on the percentage of income needed to buy a median-priced home relative to historic averages. An index above 100 means median home prices are more affordable than historic averages and an index below 100 signifies median home prices being less affordable than the historic average.