Housing Affordability Inches Lower in 2nd Quarter

Filed in Economics, Sales & Marketing by on August 10, 2017 0 Comments

home or saleRising home prices offset a quarter-point drop in mortgage interest rates to move housing affordability slightly lower in the second quarter of 2017, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released today.

“While builder confidence remains solid and sales and starts are running at a healthy clip above last year’s levels, housing continues to confront persistent headwinds,”said NAHB Chairman Granger MacDonald. “Rising material prices, particularly lumber, along with chronic shortages of buildable lots and skilled labor are putting upward pressure on home prices and impeding a more robust housing recovery.”

“The job market continues to gain steam and this is boosting housing demand,” said NAHB Chief Economist Robert Dietz. “Meanwhile, growing incomes and attractive mortgage rates are helping to keep housing affordable by partially offsetting ongoing home price appreciation. Home prices will continue to rise as inventory remains tight. NAHB expects the housing market will continue to make gradual gains in 2017.”

In all, 59.4% of new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $68,000. This is down from the 60.3% in the first quarter.

The national median home price rose to $256,000 in the second quarter from $245,000 in the first quarter of 2017. Meanwhile, average mortgage rates fell 25 basis points in the second quarter to 4.08% from 4.33% in the first quarter.

For the third consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation’s most affordable major housing market. There, 93.3% of all new and existing homes sold 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 for the second straight quarter, with 96.9% of homes sold affordable to families earning the median income of $62,500.

For the 19th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 7.6% of homes sold in the second quarter were affordable to families earning the area’s median income of $113,100. All 10 of the least affordable markets were in California.

Please visit nahb.org/hoi for tables, historic data and additional details, and read Rose Quint’s analysis in the NAHB Eye on Housing blog.

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