Housing affordability falls in the United States

Housing affordability at a national level in the United States is down from a year ago and is struggling to keep pace with the growth of home prices, according to new research.

The analysis from the National Association of Realtors shows that housing affordability is down from a year ago in June as the median price for a single family home in the US is up from a year ago.

Regionally, the West had the biggest increase in price at 10% while the Northeast experienced the slowest price growth at 4.4%. The Midwest and the South both contributed solid price gains of 7.2%.

Nationally, affordability is down from 155.2 in June 2014 to 153.1 in June 2015 and down month on month in all regions. The Midwest had the largest drop of 4.8% while the West fell only 3.5%.

From one year ago, affordability is down in all regions except the Northeast which had an increase of 1.1%. The West saw the biggest decline in affordability at 3.6% and the Midwest had the smallest decline of 0.7%.

Despite month to month changes, the most affordable region is the Midwest where the index is 191.1. The index is 161.4 in the South, 150.7 in the Northeast, and 113.9 in the West.

With rates on the rise potential home buyers may try to hasten their search and purchase process. Lending options with low down payments are now more widely available. Mortgage applications are currently up but demand may level off if prices and rates continue to increase, the report explains.

It also points out that new home construction has favoured the multifamily inventory stock while single family homes have been lagging in production. An increase in single family construction will help ease the inventory shortage issue and slow down price growth, it suggests.