With average prices nearing $300,000, Utahns are finding it harder to afford the houses they want.

An economic analysis presented Thursday by Wells Fargo economists shows a huge disparity between housing prices and incomes in Utah.

"The problem reflects affordability problems, because home prices have increased twice as fast as income," said Kelly K. Matthews, executive vice president and economist for Wells Fargo. "Utah's housing sector is facing a serious disequilibrium."

Housing affordability fell more than 20 percent from 2005 to 2007, Matthews said. He says pricing is the problem and believes overbuilding isn't the the main issue. House prices need to be lowered in order for them to be affordable, Matthews said.

Repercussions of the affordability problem are seen not only in the high cost of houses but also in the lower numbers of permits and in decreasing sales. House prices would need to drop by 20 percent in order to regain the 2005 affordability ratio, a decline which is unlikely, Matthews said.

Reported numbers also show a 19 percent decline in home sales.

In the past four years, the average price for a house in Salt Lake County rose by more than $110,000. Rising home prices create higher monthly payments and require a higher income in order to qualify for a mortgage loan, further stretching already stretched incomes.

Housing issues also have affected the stock market because of problems with subprime loans, said Sterling Jenson, regional managing director for Wells Capital Management, a money-management company. When companies became lax with mortgage-qualifying standards, the demand for houses rose significantly. When mortgages reset and those with subprime loans began defaulting at a high rate, a hole was left in the market, he said.

"Ride the tide," Jenson said, referring to the ups and downs in the stock market. He said he's optimistic about investors gaining about 15 percent at the end of the year.

Even with the strong market and Utah's economy, prices make it difficult for many people to afford a house. People buying their first house are the most affected, Matthews said.

Utah's hourly wage remains above the national average, Matthews said, but that isn't necessarily good news for homebuyers.

"In no way have (wages) kept up with the housing price situation," he said.

However, Utah isn't alone. Decreasing house affordability can be seen throughout the West, especially in Phoenix, San Diego, Las Vegas and Boise.

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E-mail: csmith@desnews.com