IRVINE, CA—The sharp decrease in interest rates over the past year is the number-one reason home prices are rising faster than wages while still being more affordable than a year ago in some markets, RealtyTrac's VP Daren Blomquist tells GlobeSt.com. After a report by the firm showed that buying a home was at the most affordable level in two years in the first quarter of 2015 despite the average US home price increasing at more than twice the pace of the average weekly wage nationwide over the past year, we spoke with Blomquist exclusively about this seeming dichotomy.

GlobeSt.com: How do you explain the seeming dichotomy between home price growth and affordability?

Blomquist: The primary reason home prices can be rising faster than wages and yet still be more affordable than a year ago is the sharp decrease in interest rates over the past year, down 57 basis points between the first quarter of 2014 and the first quarter. The cost of borrowing is cheaper, making buying a home more affordable. In addition, we did see a substantial number of markets where wage growth outpaced home price growth over the past year, counter to the national trend. That was the case in one-third of the 582 counties we looked at, including Kings County, New York (Brooklyn); Orange County, CA;, Riverside County, CA; Fairfax County, VA; and Cook County, IL (Chicago).

GlobeSt.com: Is increased affordability leading to more mortgages being granted?

Blomquist: Absolutely. We show 3.5 million loans originated in the first half of 2015, up 24% from the first half of 2014. Purchase originations were up 8%, and refinance originations were up 35%.

GlobeSt.com: How are affordability and wage growth typically linked?

Blomquist: In a properly working housing market, affordability is very closely tied to wage growth, limiting home price growth to what people can truly afford based on their wages. When we see affordability disconnected from wage growth, where buyers can “afford” a home just based on what they think or declare instead of on their actual wages, the housing market starts growing too fast.

GlobeSt.com: What else should our readers know about your report's findings?

Blomquist: Rumors of an affordability crisis in the home-buying market have been greatly exaggerated. When we compare affordability now to what it was during the last housing bubble, we are still on solid ground. Of course, rising interest rates could quickly start changing that, but I would expect that if rising interest rates cause affordability to worsen, then we would more likely see home prices dip modestly right away to adjust rather than see another bubble inflated followed by a crash in home prices like we saw 10 years ago.