Shortages of buildable lots and skilled labor, along with excessive regulations, rising mortgage interest rates and ongoing home price appreciation pushed housing affordability in the fourth quarter of 2016 to its lowest point since the third quarter of 2008, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).
In all, 59.9 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $65,700. This is down from the 61.4 percent of homes sold that were affordable to median-income earners in the third quarter.
The national median home price increased from $247,000 in the third quarter to $250,000 in the fourth quarter. Meanwhile, average mortgage rates edged higher from 3.76 percent to 3.84 percent in the same period.
Youngstown-Warren-Boardman, Ohio-Pa. was rated the nation’s most affordable major housing market, where 90.4 percent of all new and existing homes sold in this year’s fourth quarter were affordable to families earning the area’s median income of $53,900. Meanwhile, Fairbanks, Alaska, was once again rated the nation’s most affordable smaller market, with 95.1 percent of homes sold in the fourth quarter being affordable to families earning the median income of $93,800.
For the 17th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 7.8 percent of homes sold in the fourth quarter were affordable to families earning the area’s median income of $104,700.
Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Salinas, where 15.2 percent of all new and existing homes sold were affordable to families earning the area’s median income of $63,500.
Visit nahb.org/hoi for tables, historic data and details.