Housing affordability opportunities hit during the third quarter that has not been seen since 2008, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index.
The new index report determined that only 56.4 percent of new and existing homes sold in the third quarter were affordable to families earning the median income of $71,900, down from 57.1 percent in the second quarter. The national median home price inched up from $265,000 in the second quarter of 2018 to $268,000 in the third quarter—and while it was a relatively minimal increase, it nonetheless resulted in the highest quarterly median price since the NAHB tracked this data. While this occurred, average mortgage rates rose by 5 basis points in the third quarter to 4.72 percent, up from 4.67 percent in the second quarter.
Syracuse, N.Y., was the nation’s most affordable major housing market for the second consecutive quarter, with 88.2 percent of all new and existing homes sold being affordable to families earning the area’s median income of $74,100. And for the fourth straight quarter, San Francisco was the least affordable major market, with only 6.4 percent of the homes sold in the third quarter of 2018 being affordable to families earning the area’s median income of $116,400.
“Continuing home price appreciation and rising interest rates coupled with persistent labor shortages are contributing to housing affordability concerns,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Builders are increasingly focusing on managing home construction costs so that they do not outpace wage gains.”