Only 42.2% of Homes Affordable to Median Income Earners in Q2
Washington, DC, November 11, 2022-Just 42.2% 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 $90,000, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI). This marks the second consecutive quarterly record low for housing affordability since the Great Recession, trailing the previous mark of 42.8% set in the second quarter.
“The housing market and affordability conditions have continued to weaken throughout the year as rising mortgage rates, supply chain bottlenecks and a lack of skilled construction workers continue to push housing costs higher,” said NAHB chairman Jerry Konter, a homebuilder and developer from Savannah, Georgia. “Entry-level buyers are particularly hurt, as more of them are getting priced out of the market.”
“Builder sentiment has declined ten straight months and worsening affordability conditions remain a top concern as single-family production continues to decline and buyers pull back because of rising interest rates,” said NAHB chief economist Robert Dietz. “The best way to reduce housing costs is to boost supply. Policymakers must prioritize fixing building material supply chains and easing excessive regulations to help bring down construction costs and enable home builders to increase housing production.”
While the HOI shows that the national median home price fell to $380,000 in the third quarter, it is still the second-highest median price in the history of the series, after the $390,000 recorded in the previous quarter. Meanwhile, average mortgage rates reached a series high of 5.72% in the third quarter, up from 5.33% a quarter earlier. Looking ahead, affordability will continue to weaken, as Freddie Mac reports that at the end of October, the 30-year fixed-rate mortgage surpassed 7% for the first time since April 2002.