The demand for housing continues outpacing supply, putting upward pressure on home prices and creating affordability challenges for potential homebuyers already badgered by tight inventory. However, consumer conditions vary geographically, meaning some states provide less stressful home-buying environments than others.
As house values grow, home purchasing power isn't just measured by how high or low prices are in a given area. Factors like local incomes and mortgage rates also help determine how much house someone can afford to buy.
Real house prices, based not only on median home values but changes in incomes and rates, increased 2.3% both year-over-year and month-over-month in January, according to First American Financial Corp.
But, some states are seeing healthy wage growth that's offsetting rising rates and prices. As a result, real house prices are declining and purchasing power is going up.
Mortgage lenders in states like Arizona can benefit from gains in homebuyer purchasing power, with real home prices falling nearly 5% in the state. In contrast, buyer conditions in New York present less than favorable circumstances for lenders, as real home prices shot up almost 9%, the greatest year-over-year increase of any state.
From Arizona to Vermont, here's a look at the 12 states where home purchasing power is going up. The house-buying power amount reflects how much a typical buyer in that state can afford to pay for a home.
The data, from the First American Real House Price Index, measures home price changes, taking local wages and mortgage rates into account "to better reflect consumers' purchasing power and capture the true cost of housing." The January 2018 data is ranked by year-over-year change in RHPI value, where a reading of 100 is equal to conditions in January 2000.
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No. 12 Hawaii
House-buying power: $485,353 Real Home Price Index: 67.06 Year-over-year RHPI change: -1.32%
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No. 11 Nebraska
House-buying power: $367,871 Real Home Price Index: 58.32 Year-over-year RHPI change: -1.47%
Historic State House on the University of Iowa Campus
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No. 10 Iowa
House-buying power: $350,882 Real Home Price Index: 59.97 Year-over-year RHPI change: -1.47%
sweet home alabama welcome sign at rest area stop off highway
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No. 9 Alabama
House-buying power: $277,460 Real Home Price Index: 55.79 Year-over-year RHPI change: -1.7%
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No. 8 New Mexico
House-buying power: $285,958 Real Home Price Index: 74.40 Year-over-year RHPI change: -1.81%
Burlington, Vermont, USA autumn town skyline.
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No. 7 Vermont
House-buying power: $373,706 Real Home Price Index: 65.63 Year-over-year RHPI change: -1.84%
Panorama of downtown Oklahoma City
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No. 6 Oklahoma
House-buying power: $295,047 Real Home Price Index: 61.07 Year-over-year RHPI change: -2.2%
Devils Tower, Wyoming on a summer day.
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No. 5 Wyoming
House-buying power: $373,938 Real Home Price Index: 71.73 Year-over-year RHPI change: -2.52%
The city skyline in Atlantic City, New Jersey.
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No. 4 New Jersey
House-buying power: $492,627 Real Home Price Index: 73.72 Year-over-year RHPI change: -3.46%
Baltimore, Maryland, USA Skyline over the Inner Harbor at dusk.
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No. 3 Maryland
House-buying power: $519,733 Real Home Price Index: 69.22 Year-over-year RHPI change: -4.35%
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No. 2 Arizona
House-buying power: $268,071 Real Home Price Index: 60.08 Year-over-year RHPI change: -4.58%
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No. 1 West Virginia
House-buying power: $282,527 Real Home Price Index: 77.44 Year-over-year RHPI change: -5.24%