Housing affordability has dropped to its lowest level in a decade in the second quarter of this year, according to new data in the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index.
During the second quarter, 57.1 percent of new and existing homes sold were affordable to families earning the median income of $71,900. This is down from the 61.6 percent level in the first quarter and it was the lowest level in this index study since mid-2008.
The NAHB blamed the evaporation of affordability homeownership options on rising prices—the national median home price rose from $252,000 in the first quarter to $265,000 in the second quarter, the highest quarterly median price recorded for this data study. Also to blame, according to the trade group, was the jump in average mortgage rates from 4.34 percent in the first quarter to 4.67 percent in the second quarter.
Syracuse, N.Y., was named the nation’s most affordable major housing market in the second quarter, with 89.1 percent of all new and existing homes sold in this period judged as affordable to families earning the area’s median income of $74,100. The nation’s most affordable smaller market was Elmira, N.Y., where 97 percent of homes sold in the second quarter were affordable to families earning the median income of $71,000. San Francisco, for the third straight quarter, was the nation’s least affordable major market, with only 5.5 percent of the homes sold in the second quarter being considered affordable to families earning the area’s median income of $119,600.
“Rising household formations, along with a strong economic expansion in the second quarter that has fueled job growth, will support housing demand in the second half of 2018,” said NAHB Chief Economist Robert Dietz. “However, growing trade war concerns and the expectation of higher mortgage rates are additional headwinds negatively affecting housing affordability.”