House shoppers purchasing the average home in June required 21.3% of the nation's median monthly income to do so, according to Black Knight. Historically, it's lower than the average of about 25% between 1995 and 2003, and down considerably from the peak of the precrisis market, when it was 34.5%. The June median income figure also marked an 18-month low.
Purchasing power increased 15%, boosted by reduced rates. Potential buyers in June could afford $45,000 "more house" for the same monthly payment they would have been making last fall, according to Ben Graboske, president of Black Knight's data and analytics division.
While home prices have not declined, their rate of growth has. In November 2018, interest rates reached a seven-year high, causing a subsequent deceleration in house values. Despite $12,000 growth in the average home price since November, lower rates chopped $108 off the monthly mortgage payment amount (for purchasers putting 20% down) in June.
"For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably," said Graboske in a press release.
"This has changed the affordability landscape significantly. Whereas nine states were less affordable than their long-term norms back in November — a key driver behind the subsequent deceleration in home prices — only
Furthermore, California's rapid pace of home growth is chilling out; the Golden State went from standing as one of the top five leaders in home price appreciation, with a rate of 8.6% a year ago, to being second-to-last this June at 1.3%.
