Average first-time homebuyers in the US were faced with the steepest year-over-year drop in starter home inventory in three years in Q4. To make matters worse, they’ll also have to pay, on average, almost 2 percent more of their income to buy a starter home, according to a new quarterly report froml Trulia.
The US housing inventory declined 9.1 percent year-over-year in the fourth quarter of 2016. This was the sixth consecutive quarter of year-over-year declines. The largest decreases in inventory were recorded in the starter home and trade-up home markets, which recorded year-over-year declines of 12.1 percent and 12.9 percent, respectively. Meanwhile, the premium market recorded a more “moderate” shrinkage of 5.6 percent from last year.
The decrease in affordability from last year was most the marked in the starter home market. Homebuyers looking for starter homes will now need to spend nearly 39 percent of their monthly income to buy a home, nearly 2 percent higher than last year.