Housing affordability dipped in the third quarter of 2017, as home prices and mortgage rates moved opposite, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). Approximately 58 percent of homes sold in the third quarter were affordable based on the national median income, $68,000, a share down from roughly 59 percent in the second quarter. The national median home price in the third quarter was $260,000, weighed against the average mortgage rate, 4.1 percent.
“Though builder confidence remains strong, they continue to deal with the long-term repercussions of this devastating hurricane season, which has exacerbated chronic labor and lot shortages and put upward pressure on material and home prices,” said Granger MacDonald, chairman of the NAHB, in a statement.
The most affordable major cities in the third quarter, based on local median home price and median income, were (in order): Youngstown-Warren-Boardman, Ohio-Pa.; Syracuse, N.Y.; Scranton-Wilkes Barre-Hazleton, Pa.; Indianapolis-Carmel-Anderson, Ind.; and Wilmington, Del.-Md.-N.J. and Cincinnati, Ohio-Ky.-Ind., according to the Index.
“Solid economic growth, along with ongoing quarterly job gains and rising household formations, are fueling housing demand,” said Robert Dietz, chief economist of the NAHB. “Tight inventories and a forecast of rising mortgage interest rates through 2018 will keep home prices on a gradual upward path and slowly lessen housing affordability in the quarters ahead.”
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