Home Affordability Is Getting Further Out of Reach

As suspected — and because we’ve heard the same from one report after another — national home prices increased 20.9 percent year over year in March, according to the latest CoreLogic Home Price Index (HPI) Report.

In other words, affording a house is getting tougher than ever.

The gain was up 11 percent from March 2021 and was the highest 12-month growth in the U.S. index since the series began in 1976. It’s the 122nd consecutive month that the measure has increased.

The forecast indicates that home prices will increase on a month-over-month basis by 1.2 percent from March 2022 to April 2022 and on a year-over-year basis by 5.9 percent from March 2022 to March 2023.

Annual gains are projected to slow to around 6 percent by next March, due in part to rising mortgage rates and higher home prices hampering affordability for some home shoppers.

“In April, 30-year fixed mortgage rates averaged nearly 2 percentage points higher than one year earlier,” Frank Nothaft, chief economist at CoreLogic, said in a statement.

“With the growth in home prices, that means the monthly principal and interest payment to buy the median-priced home was up about 50 percent in April [2022] compared with last April.”

According to Freddie Mac, interest rates hit 5.10 percent last week.

A 5 percent increase in home prices would push home affordability to its worst record on level, according to Black Knight’s latest monthly Mortgage Monitor Report. As of April 21, the payment-to-income ratio for homeowners was 32.5 percent, 1.6 percentage points short of the record of 34.1 percent in July 2006.

Mirroring metro level trends, Florida and Arizona were the states with the highest home price gains at 31.4 percent and 28.7 percent, respectively. Tampa, Fla., had the highest year-over-year home price increase of the nation’s 20 largest metro areas at 32.5 percent. On the lower end of the price-growth spectrum, the New York and Washington metro areas experienced 9.9 percent increases.

Irvine, Calif.- based CoreLogic analyzes four individual home-price tiers — low, low-to-middle, middle-to-moderate, and high price — that are calculated relative to the median national home sale price.
In March, home price growth accelerated for all four price tiers. All price tiers increased between 21.5 percent and 21.8 percent in March 2022.

CoreLogic’s next HPI report, featuring April data, will be issued on June 7.