Home Affordability Dips in Second Quarter

Washington, DC, Aug. 12, 2016 -- Solid home price appreciation more than offset a modest reduction in mortgage interest rates to push housing affordability lower in the second quarter of 2016, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

“Firm job growth, historically low interest rates and healthy price appreciation in many markets are all positive signs that the housing recovery continues to move forward,” said NAHB Chairman Ed Brady.

“At the same time, regulatory hurdles and rising costs for buildable lots and skilled labor continue to put upward pressure on the cost of building a home.”

“Though we have seen a modest drop in affordability in the second quarter, the HOI is still fairly high by historical standards,” said NAHB Chief Economist Robert Dietz. “Rising employment, favorable mortgage rates and increasing household formations will keep the housing market on a gradual, upward path during the rest of the year.”

In all, 62 percent 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 $65,700. This is down from the 65 percent of homes sold that were affordable to median-income earners in the first quarter.

The national median home price increased from $223,000 in the first quarter to $240,000 in the second quarter. Meanwhile, average mortgage rates edged lower from 4.05 percent to 3.88 percent in the same period.