Housing Affordability Sees Slight 1st-Quarter Uptick

Filed in Economics by on May 11, 2017 0 Comments

Rising wages and moderating home prices offset a rise in mortgage interest rates to give housing affordability a slight boost in the first quarter of 2017, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released today.

“Builders are reporting confidence and solid traffic in many markets across the nation even as they continue to grapple with nagging headwinds,” said NAHB Chairman Granger MacDonald. “Regulatory constraints, trade barriers on Canadian softwood lumber, and persistent shortages of lots and labor are slowing the pace of the housing recovery.”

“Ongoing job growth continues to fuel demand for housing, while wage growth is helping to offset the effects of rising mortgage rates and keep home prices affordable,” said NAHB Chief Economist Robert Dietz. “NAHB anticipates that housing will continue on a gradual upward path throughout the year.”

In all, 60.3% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the median income of $68,000. This is up from the 59.9% of homes sold that were affordable to median-income earners in the fourth quarter of 2016.

The national median home price fell to $245,000 in the first quarter from $250,000 in the final quarter of 2016. Meanwhile, average mortgage rates rose nearly half a point from 3.84% in the fourth quarter to 4.33% in the first quarter.

For the second straight quarter, Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation’s most affordable major housing market. There, 92.7% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $54,600.

Meanwhile, Kokomo, Ind., was rated the nation’s most affordable smaller market, with 96.3% of homes sold in the first quarter being affordable to families earning the median income of $62,500.

For the 18th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 11.8% of homes sold in the first quarter were affordable to families earning the area’s median income of $108,400.

At the very bottom of the small-market affordability chart was Salinas, Calif., where 13.8% of all new and existing homes sold were affordable to families earning the area’s median income of $63,100.

Please visit nahb.org/hoi for tables, historic data and details.

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