Housing Affordability Declines in Third Quarter
Washington, DC, Nov. 15, 2013 -- Strengthening house prices and increased interest rates contributed to lower housing affordability in the third quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
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In all, 64.5% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $64,400. This is down from the 69.3% of homes sold that were affordable to median-income earners in the second quarter, and the biggest HOI decline since the second quarter of 2004.
“Housing affordability is being negatively affected by a ‘perfect storm’ scenario,” observed NAHB Chairman Rick Judson.
“With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor.”
“The decline in affordability is the result of higher mortgage rates and the more than year-long steady increase in home prices,” observed NAHB Chief Economist David Crowe.
“Some of the decline in the affordability index could be the result of a loss in some more modest priced home sales as tight underwriting standards have limited the purchases by moderate income families.”