Affordability has hit its lowest in 10 years, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunities Index (HOI) for the second quarter of 2018.
Approximately 57 percent of homes sold in the second quarter were affordable based on income (the median, nationally, is $71,900), down from roughly 62 percent in the first quarter. The median price was $265,000, weighed against the average mortgage rate, 4.67 percent.
The most affordable major metros in the second quarter, based on income and local median price, were (in order): Syracuse, N.Y.; Scranton-Wilkes Barre-Hazleton, Pa.; Harrisburg-Carlisle, Pa.; Indianapolis-Carmel-Anderson, Ind.; and Youngstown-Warren-Boardman, Ohio-Pa.
“Tight inventory conditions and rising construction costs are factors that are holding back housing and putting upward pressure on home prices,” said Randy Noel, chairman of the NAHB, in a statement. “Meanwhile, tariffs on Canadian lumber imports into the U.S. are further eroding housing affordability. Builders are struggling to manage these costs to ensure pricing does not outpace expected gains in wage growth.”
“Rising household formations, along with a strong economic expansion in the second quarter that has fueled job growth, will support housing demand in the second half of 2018,” says Robert Dietz, chief economist at the NAHB. “However, growing trade war concerns and the expectation of higher mortgage rates are additional headwinds negatively affecting housing affordability.”
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