Affordability Expectations Show Slight Improvement
Just 24% of prospective buyers can afford at least half the homes available in their markets, according to the second quarter of 2020's Housing Trends Report. The other 77% are able to afford fewer than half the homes.
Although these results demonstrate housing affordability remains a serious challenge, buyers' affordability expectations are slightly more favorable than a year ago, when only 20% could afford at least half the homes for-sale and the other 80% could afford fewer than half. Falling mortgage rates are likely a key factor contributing to this slight uptick.
Despite some buyers' improved prospects, over 75% of buyers of every generation can afford fewer than half the homes for sale in their markets. Geographically, over 70% of prospective buyers in every region of the country can afford fewer than half the homes available.
The timing of the data collection for this report (June 16-28) is important, as results need to be interpreted in the larger context of the U.S. economy and the trajectory of new COVID-19 case counts at the time. In June, the labor market showed signs of recovery, gaining 4.8 million jobs and a lower unemployment rate. The 30-year fixed mortgage rate continued to fall, reaching 3.13% by the last week of the month.
The number of COVID cases nationally was stable through the first half of June, only beginning their ascent around June 15. For these reasons, we assess that responses in this quarter's report reflect a period when workers were returning to their jobs, mortgage rates looked increasingly attractive, and the pace of new cases had only recently started to increase.
The Housing Trends Report is a research product created by the NAHB Economics team with the goal of measuring prospective home buyers' perceptions about the availability and affordability of homes for-sale in their markets.
Rose Quint, NAHB's assistant vice president of survey research, provides more details in this Eye on Housing blog post.