Affordability continues to slip across the U.S., falling even further from last year as home prices continue to rise and mortgage rates increase, according to a joint report from the National Association of Realtors and

The report showed that housing affordability is down from a year ago, and fewer households can afford the active inventory of homes for sale based on their income.

Using data on mortgages, state and metro area-level income and listings on, the Realtors Affordability Distribution Curve and Score is designed to examine affordability conditions at different income levels for all active inventory on the market. A score of one or higher generally suggests a market where homes for sale are more affordable to households in proportion to their income distribution.

In some of the least affordable markets, only about 19% to 23% of active housing inventory is affordable to a median income level earner. These markets include Hawaii, with an affordability score of 0.52, California at 0.57, Oregon at 0.6 and the District of Columbia, Montana and Rhode Island all at 0.64.

On the other end of the spectrum, states with the most affordable housing included Ohio at 1.12, Indiana at 1.09, Kansas at 1.09, Iowa at 1.07 and West Virginia at 1.05. In these areas, a median income-earning household could afford about 54% to 62% of the active housing inventory.

“The survey confirms that the lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest,” NAR Chief Economist Lawrence Yun said. “This is why first-time buyers continue to struggle finding affordable properties to buy and are making up less than a third of home sales so far this year.”

Nationally, the affordability score decreased from 0.86 in March 2017 to 0.84 in March 2018, the report showed. This is due to home prices rising across the country and a spike in mortgage interest rates.

However, 14 states, including some of the least affordable states, showed an improvement in affordability since last year. The greatest increase in affordability was in the District of Columbia, which rose from 0.59 to 0.64, followed by Vermont which increased from 0.81 to 0.84, Hawaii from 0.5 to 0.52 and North Dakota from 0.95 to 0.97.

“We’ve seen affordability improve as inventory declines have begun to lessen these areas,” Chief Economist Danielle Hale said. “More balanced supply and demand dynamics have kept listing price growth below the national average, providing some much needed relief for stretched home buyers in these areas.”

NAR explained that while wages are increasing, so are home prices. Yun explained what can be done to combat the rising affordability issues.

“Wages are growing, which is welcome news for prospective buyers, but prices are increasing at a faster rate, up almost 6% in the first two months of 2018,” he said. “Solutions to improve these conditions include more homeowners selling, investors releasing their portfolio of single-family homes back onto the market and more single-family housing construction.”

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