Homes were less affordable than their historic averages in 24% of U.S. markets as prices rose and wage growth slowed, Attom Data Solutions found in its third-quarter affordability index.
Attom reported Thursday that affordability worsened compared with the second quarter and a year ago when the share of markets that were less affordable than normal was 22% and 19%, respectively. In total, 101 of 414 counties had an affordability index below 100 for the quarter, which indicates that a median-price home was less affordable than the average based on data going back to 2005.
Additionally, in 89% of markets home price growth exceeded wage growth.
The index also reversed the trend seen in the second quarter that indicated affordability was improving, according to Attom Senior Vice President Daren Blomquist.
"Home price appreciation accelerated in the majority of markets and wage growth slowed in the majority of local markets as well as nationwide," Blomquist said in a news release. "This unhealthy combination resulted in worsening affordability in 63% of markets despite mortgage rates that are down 45 basis points from a year ago."
But affordability did manage to improve in 37% of the markets analyzed when compared with 2015, including high-priced markets such as Marin County, Calif., in the San Francisco Bay Area and Kings County, N.Y., which comprises Brooklyn.
Still such improvements did not stop these markets from being among the least affordable in the country, along with Santa Cruz County, Calif., San Luis Obispo County, Calif., and New York County (Manhattan).
The New York metropolitan area also had the least affordable closing costs nationwide, according to Attom, while the most affordable closing costs were found in the St. Louis metro area.
