Home affordability in the third quarter improved in 60% of U.S. markets compared to the previous quarter, though it was still worse off than most markets last year, according to the Attom Data Solutions Home Affordability Index.
Of the 406 counties analyzed, 243 were more affordable in the third quarter from the second quarter, but 79% of those counties had better affordability in the third quarter of 2016.
The national Home Affordability Index was 100 in the third quarter, the lowest this figure has been since it was 86 in the third quarter of 2008.
"Falling interest rates in the third quarter provided enough of a cushion to counteract rising home prices in most U.S. markets and provide at least some temporary relief for the home affordability crunch," said Daren Blomquist, senior vice president at Attom, in a press release.
"More sustainable relief for the affordability crunch, however, will need to be some combination of slowing home price appreciation and accelerating wage growth," he said.
In the third quarter, annual wage growth outpaced annual home price appreciation in 193 counties. This is the first time since the first quarter of 2012 that at least half of all markets saw wage growth accelerating faster than home price growth.
"With Southern California boasting some of the highest average sales prices in the country, our market is a testament to the importance of local community job growth," said Michael Mahon, president at First Team Real Estate of Southern California, in a press release.
"Los Angeles County is experiencing a sluggish job creation environment, creating an even wider gap in housing affordability. But in Orange County, where we are seeing local government partnering with business owners on growth incentives and business owner recruitment, we continue to see an economic environment where wage growth is exceeding the annual cost of housing inflation," he said.
Median home prices have grown 73% since bottoming out in this year's first quarter, while average weekly wages have risen 13% over the same period.