Housing Affordability Steady in Q3 Amid Supply Chain Challenges
Washington, DC, November 12, 2021-Only 56.6% 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 $79,900, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI). This is unchanged from the 56.6% of homes sold in the second quarter of 2021 and remains the lowest affordability level since the beginning of the revised series in the first quarter of 2012.
“Persistent building material supply chain bottlenecks and tariffs on Canadian lumber and Chinese steel and aluminum continue to place upward pressure on construction costs and home prices,” said NAHB chairman Chuck Fowke. “Policymakers must fix supply chain vulnerabilities that are disrupting and delaying construction projects and hurting housing affordability.”
“Interest rates are anticipated to gradually rise in the coming months as the Fed begins to taper its monthly bond and mortgage-backed securities purchases,” said NAHB chief economist Robert Dietz. “To keep affordability problems from worsening in the future, policymakers need to tackle supply-chain challenges that are hindering new home production. Helping builders boost output will also slow the rapid rise in home prices that has occurred over the past year.”
The HOI shows that the national median home price increased to a record $355,000 in Q3, up $5,000 from Q2 and $35,000 from Q1. Meanwhile, average mortgage rates fell by 14 basis points in the third quarter to 2.95% from the rate of 3.09% in the second quarter. However, mortgage rates are currently running above 3.1%, and this higher trend could affect affordability later this year and into 2022.