With home prices at record highs and mortgage rates above 7 per cent, housing affordability has plummeted to its lowest level since 1984, mortgage data firm Black Knight said on Thursday. But observers say a lack of inventory has helped keep home prices high.

Monthly payments on the average home accounted for about 38 per cent of median household income in July, up from 36.8 per cent the previous month. That makes housing "the least affordable it has been since 1984," the company said.

Housing was most affordable in January 2013, when the payment-to-income ratio was just 17.1 per cent, Black Knight said. But that was also the month the market bottomed out after the Great Recession.

Interest rates on 30-year loans were much higher then, at 13.2 per cent, the company added. Black Knight's data goes back to 1975. Housing was most affordable in January 2013, when the payment-to-income ratio was just 17.1 percent, the company said. But that was also the month the market bottomed out after the Great Recession.

With interest rates at 7.23 percent as of Aug. 24, the typical mortgage payment (including principal and interest) for a 30-year fixed-rate mortgage with a 20 percent down payment on a median-priced home has risen 91 percent to $2,423 over the past two years, Black Knight said.

Home prices have not provided respite for weary homebuyers, who are still grappling with the rising cost of homeownership.

Overall, home prices hit an all-time high in July, rising 2.3 per cent year-over-year after rising just 0.9 per cent year-over-year in June, according to Black Knight's Home Price Index. All data are seasonally adjusted.

The median price of an existing home was $406,700 in July, and $436,700 for new construction.

According to Black Knight's index, home prices increased year-over-year in 99 of the 100 largest markets in July, with Hartford, Connecticut, leading the way with a 1.6 percent annual increase, followed by Providence, R.I. (1.2 percent) and Philadelphia, Pa. (1.1%).

The only other market with a year-over-year decline in home prices was Austin, with a growth rate of -0.1 percent.

If home price gains remain at their current pace - which is unlikely given how tight affordability has become - annual gains will return to more than 7.5 percent by the end of the year, Andy Walden, vice president of research at Black Knight Enterprises, said in a statement.

In any case, a further acceleration in annual appreciation in August is almost a foregone conclusion, he added.