Affordability will be an issue in nearly half of all metropolitan areas as the home purchase season starts.
Consumer home-buying power, which takes into account changes in income and the interest rate, increased 0.6% in January compared with December 2016, but it fell 2.3% year over year, according to the First American Real Home Price Index.
"Almost half of the markets we track saw double-digit affordability declines in January, compared with a year ago. The low inventory of homes for sale across much of the country is creating increased competition and setting the stage for a very robust sellers' market this spring," said First American Financial Corp.'s Chief Economist Mark Fleming.
"While affordability is lower compared to a year ago, the level of affordability in most markets is still high by historical standards, which is why demand is expected to remain strong this spring," he continued.
Real house prices, which First American adjusts for income and interest rates, were down 0.1% in January from December, but up 8.2% from January 2016.
In Jacksonville, Fla., affordability declined by 19.3% compared with one year ago. Other markets with significant declines in affordability include Charlotte, N.C. (down 14%), Milwaukee (down 14%), Denver (down 12.6%), and Tampa, Fla. (down 12.4%).