Housing Affordability Fell to 10-Year Low in Q3
Washington, DC, November 9, 2018-A modest increase in interest rates and home prices kept housing affordability at a ten-year low in the third quarter of 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released.
In all, 56.4% 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 $71,900. This is down from the 57.1% of homes sold in the second quarter that were affordable to median-income earners and the lowest reading since mid-2008.
The national median home price edged up from $265,000 in the second quarter of 2018 to $268,000 in the third quarter. This is the highest quarterly median price in the history of the HOI series. At the same time, average mortgage rates rose by a nominal 5 basis points in the third quarter to 4.72% from 4.67% in the second quarter.
“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, Louisiana. “Builders are increasingly focusing on managing home construction costs so that they do not outpace wage gains.”