Fewer homes are priced within reach today, according to the REALTORS® Affordability Distribution Curve and Score from the National Association of REALTORS® (NAR) and realtor.com®. Affordability is being challenged by increasing prices and rates, the report states.
Affordability is most untenable in California, Hawaii, Montana, Oregon, Rhode Island and Washington, D.C.—all with “Affordability Scores” considerably less than one. Generally, an Affordability Score of one or higher indicates listings in the market are priced reasonably enough for households to afford them, based on area incomes. Between 19 and 23 percent of listings are within reach in these states.
By metro, Affordability Scores are below one in Los Angeles-Long Beach, Calif., San Diego-Carlsbad, Calif., San Jose-Sunnyvale, Calif., Oxnard-Thousand Oaks-Ventura, Calif., and San Francisco-Oakland, Calif. In these areas, between 3 and 11 percent of listings are within reach.
“The survey confirms that the lack of entry-level supply is putting affordability pressures on too many buyers—especially those at the lower end of the market, where demand is the strongest,” says Lawrence Yun, chief economist at NAR. “This is why first-time buyers continue to struggle finding affordable properties to buy and are making up less than a third of home sales so far this year.
“Wages are growing, which is welcome news for prospective buyers, but prices are increasing at a faster rate—up almost 6 percent in the first two months of 2018,” Yun says. “Solutions to improve these conditions include more homeowners selling, investors releasing their portfolio of single-family homes back onto the market and more single-family housing construction.”
Affordability, however, improved in 14 states, with the most progress in Hawaii (albeit below one), North Dakota, Vermont and Washington, D.C. It also improved in 35 metros, including Austin-Round Rock, Texas, Syracuse, N.Y., North Port-Sarasota, Fla., and Palm Bay-Melbourne, Fla.
“We’ve seen affordability improve as inventory declines have begun to lessen these areas,” says Danielle Hale, chief economist for realtor.com. “More balanced supply and demand dynamics have kept listing price growth below the national average, providing some much needed relief for stretched homebuyers in these areas.”
Affordability Scores are highest in Indiana, Iowa, Kansas, Ohio and West Virginia, where between 54 and 62 percent of listings are within reach, and in Youngstown-Warren-Boardman, Ohio-Pa., Dayton, Ohio, Toledo, Ohio, Akron, Ohio, and Scranton-Wilkes Barre, Pa., where 75 percent of listings are within reach.
For more information, please visit www.nar.realtor.
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