Affordability has a strong impact on homeownership. Not surprisingly, four of five states with the lowest homeownership rates in the US are characterized by markets with high prices. Washington, DC has the lowest homeownership rate at 45.3%. At the opposite end of the spectrum, West Virginia, New Hampshire, Michigan, and Maine have among the highest affordability and homeownership rates. The dispersion of state homeownership rates is a wide 22.4 percentage points around the US average of 65%, split symmetrically at 11.2 points on either side, with the exception of DC. More information about state homeownership rates is available in the Local Market Reports for the 2nd quarter of 2013.
Home prices keep going up, according to the latest data from the Federal Housing Finance Agency. Prices are up 3.7 percent from one year ago to May. The Mountain states covering Arizona, Nevada, Idaho, Montana, Utah, Colorado, and New Mexico showed the strongest gains with a 6.3 percent annual gain. Read the FHFA press release here >
The following table shows home price trends according to various separate measurements using different methodologies. Though the magnitudes differ, one consistent theme is that home prices have been rising in recent months. No doubt there are markets with continued falling prices, but now there are more markets with rising prices, which thereby raises the national price index. Another point to note is that all price measurements are lagging indicators. What is happening now in late July is likely to even further strengthen home values because of tightening inventory conditions. Qualitative information, such as foot traffic at open houses, the number of phone inquiries, and the degree of seriousness of buyers are all rising according to REALTOR® member survey of market conditions. Though some homebuyers are now entering the market a step late they are still nonetheless essentially buying at record high affordability conditions.
In a recent report, “The 8th Annual Demographia International Housing Affordability Survey,” which referenced NAR’s housing data, the authors look at housing affordability in 325 metropolitan markets in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States.
The survey showed that housing affordability is highest among U.S. markets. Following the U.S. are markets in Canada and Ireland. The United Kingdom, Australia and New Zealand rank as the least relatively affordable markets.