A consumer's ability to afford to purchase a home fell to an eight-year low in the fourth quarter because of rapid price appreciation, moderate wage growth and the post-election increase in interest rates, according to Attom Data Solutions.
Nationally, the affordability index in the fourth quarter was 103, down from 108 in the third quarter and 116 in the fourth quarter of 2015. It was the lowest level since the fourth quarter of 2008, when it was 102.
And the trend is likely to get worse next year, said Daren Blomquist, senior vice president at Attom.
"The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability next year," Blomquist said in a press release. "Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets."
A growing number of markets across the country were already feeling an affordability pinch. Of the 447 counties Attom looked at, 29% were less affordable than their historic average. This was up from 24% in the third quarter and 13% in the fourth quarter of 2015.
Of the five counties with the largest population that are least affordable, two were in New York City: Kings County (Brooklyn), with an affordability index of 91, and Queens County at 95. Another pair was Texas neighbors Dallas County at 91 and Tarrant County (Fort Worth) at 93. Finally there was Alameda County, Calif., in the East Bay part of the Bay Area, at 93.
The counties that were the least affordable to buy a home as percentage of the buyers' income were: Kings County, N.Y. (127.2% of average wages needed to buy a median-priced home); Santa Cruz County, Calif., 113.7%; Marin County, Calif., 111.9%; Summit County, Utah, 105.3%; and New York County (Manhattan), 102.6%.