AgentIndustry News

Home prices are most affordable in 2 years — but are buyers’ wages enough?

Joint report by Realty Trac and Clear Capital finds that homes are more affordable, but prices are still outpacing wage growth
  • Home prices in the first quarter of the year hit their most affordable level in two years.
  • The average interest rate on a 30-year fixed rate mortgage dropped 57 basis points, or 13 percent from the first quarter of 2014 to the first quarter of 2015.
  • The drop in interest rates -- along with wage growth outpacing home price appreciation in 32 percent of counties -- meant buying a home in the first quarter required a smaller share of the average wage compared to a year ago.

Although some housing industry analysts are concerned that home price growth is outpacing wage growth, some are celebrating the news that that U.S. home affordability just hit to a two-year low. According to a joint report issued today by housing data provider RealtyTrac and real estate services provider Clear Capital, home prices in the first quarter of the year hit their most affordable level in two years, despite the average home price increasing at more than twice the pace of the average weekly wage. The companies said average home price appreciation outpaced average wage growth between Q1 2014 and Q1 2015 in 397 of the 582 counties analyzed for the report, or 68 percent. But during the same time period, the average interest rate on a 30-year fixed rate mortgage dropped 57 basis points, or 13 percent, from 4.34 percent in Q1 2014 to 3.77 percent in Q1 2015. The drop in interest rates -- along with wage growth outpacing home price appreciation in 32 percent of c...