Housing affordability hits record low

Household income increased 5% since April 2021 and boosted consumer house-buying power, though even that was not enough to offset the affordability loss from fast-rising rates and prices over the year. The index recorded a decrease of 8.7% in consumer house-buying power between March and April 2022, and a 16.7% decrease year over year.

Taking into account household income growth and nominal house prices – which vary per city – First American found that affordability declined the most year over year in Charlotte, North Carolina (+62.5%), followed by Tampa, Florida and Raleigh, North Carolina tied for second (+60%), then Orlando, Florida (+56.2%) and Phoenix (+56.1%).

The drop in affordability in Charlotte was because of the 28% annual increase in nominal house price growth fueled by strong investor activity and net-in migration against a limited housing supply. In Tampa, the decline in affordability was driven by the annual nominal house price growth of 37%.

“Comparing the decline in affordability in Charlotte with Tampa illustrates the importance of shifts in household income,” said Fleming. “While annual house price appreciation in Tampa outpaced that of Charlotte, the decline in affordability was tempered by growth in household income.