Affordability increased marginally in the fourth quarter of 2017, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunities Index (HOI).
Approximately 59 percent of homes sold in the fourth quarter were affordable based on the national median income, $68,000, up from roughly 58 percent in the third quarter. The national median home price in the fourth quarter was $255,000, weighed against the average mortgage rate, 4.06 percent.
The most affordable major metros in the fourth quarter, based on local median home price and median income, were (in order): Youngstown-Warren-Boardman, Ohio-Pa., and Syracuse, N.Y.; Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes Barre-Hazleton, Pa.; and Columbia, S.C., according to the Index.
“Builder confidence and consumer demand remain strong, and this should help bring more buyers into the marketplace in the year ahead,” said Randy Noel, chairman of the NAHB, in a statement. “At the same time, builders are working hard to keep home prices affordable as they continue to grapple with persistent labor and lot shortages, burdensome regulations and rising costs for building materials. Another factor that could have a negative effect on housing affordability in the first quarter is a recent rise in mortgage interest rates.”
“Ongoing job and economic growth coupled with tight inventories and rising household formations are boosting housing demand,” said Robert Dietz, chief economist of the NAHB. “Meanwhile, NAHB has reduced its home price forecast this year to 2.9 percent as a result of the recently enacted tax reform legislation. While it will further boost economic activity, the new tax law is expected to contribute to price softness in some high-cost, high-tax markets now that deductions for income and property taxes are capped at $10,000 per year.”
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