Housing affordability toughest in a decade

Sept. 10, 2018

Increasing home prices, higher interest rates and a jump in building material costs are taking a toll on housing affordability.

The average price of a home sold in the city of Sioux Falls in August was $226,837. That’s 3.9 percent lower than the same time last year, according to the Realtor Association of the Sioux Empire, Inc.

Total sales fell, too, though. Closed sales for the month dropped 3.1 percent year-over-year, and new listings dropped 10.3 percent.

Nationally, home prices have increased 6 percent in the past 12 months, while median household income has increased 2.6 percent, according to the National Association of Home Builders.

“That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges,” according to an analysis included with the monthly RASE report.

In Sioux Falls, the average home price is up 3.7 percent year-over-year for the first eight months of the year, and the median price is up 5.2 percent.

“The potential of an affordability conundrum has veered into the national spotlight as household wages struggle to keep pace with home price increases,” the report said. “Yet it is ill-advised to predict a heavy shift toward fewer sales and lower prices. Consumers have learned a lot in the last decade.”

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Housing affordability toughest in a decade

Increasing home prices, higher interest rates and a jump in building material costs are taking a toll on housing affordability.

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