Rising home prices pushed housing affordability down in May compared with last year, making homes a little less affordable to the average family, according to the National Association of REALTORS®’ latest housing affordability index.
The median price for a single-family home rose to $213,600 in May, up 4.9 percent from a year ago. However, the affordability picture may improve in the coming months as price gain slow. Meanwhile, mortgage rates rose 77 basis points from last year (with one percentage point equal to 100 basis points).
“While jobs and income levels are up slightly from last year, they are not growing fast enough to offset price increases,” writes Michael Hyman, an NAR research assistant, on NAR’s Economists’ Outlook blog. “Having money for a down payment can still be a big hurdle for potential home buyers who already pay comparable rent payments.”
Affordability was down in May in all regions of the country, with the South posting the largest drop in affordability in the month, but the West saw the largest slump in affordability year-over-year after seeing the largest price gain of 8.4 percent.
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Source: NAR 07/15/2014