Home prices are up 12 percent from a year ago. When that's combined with higher mortgage rates—up a full percentage point since last spring —it chips away at housing affordability.
"Affordability has fallen to a five-year low, as home price increases easily outpaced income growth," Lawrence Yun, chief economist for the National Association of REALTORS®, noted in a recent housing report. "Expected rising mortgage interest rates will further lower affordability in upcoming months."
According to a new report by Interest.com, only eight housing markets out of the top 25 are deemed “affordable” for households that earn median income. Income growth is not keeping pace with home prices, the report notes.
Interest.com finds the following metro areas are the least affordable (the percentage reflects the amount by which median household income in the area falls short of the income needed to buy a median-priced home there):
- San Francisco: -47.93%
- San Diego: -37.71%
- New York: -35.82%
- Los Angeles: -30.31%
- Miami: -24.56%
On the other hand, Interest.com found the most affordable metro areas for housing are the following (the percentage reflects the amount by which median household income in the area exceeds the income needed to buy a median-priced home there):
- Atlanta: +24.92%
- Minneapolis: +23.86%
- St. Louis: +17.94%
- Detroit: +16.87%
- Pittsburgh: +11.33%
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