Home Prices Growing Faster Than Wages In Two-Thirds Of U.S. Housing Market

A house will be the largest purchase that many Americans make in their lifetime. Unfortunately, for the majority of the country, that purchase is getting more and more expensive.

A new report by RealtyTrac found that home prices have been rising at a higher rate than wages in nearly two-thirds of U.S. housing markets. Despite the major pullback in housing prices since the peak of the bubble, prices in 9 percent of U.S. markets remain above their historical averages compared to wages.

While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets, Daren Blomquist, senior vice president of RealtyTrac explains.

Although recent data indicating that house flipping is at all-time highs in certain markets, prices are still nowhere near their bubble peaks. The average worker now needs to devote about a third of his or her wages to a monthly mortgage payment. That number was about half in 2006.

However, in the priciest markets in the country, New York City and San Francisco, home buyers must spend 95-120 percent of the average wage on mortgage payments.

So far this year, the SPDR S&P Homebuilders (ETF) (NYSE:XHB) is down 4.5 percent.

Disclosure: the author holds no position in the stocks mentioned.