Rising Incomes Boost Housing Affordability in First Quarter of 2018

Strong wage growth more than offset an increase in mortgage interest rates to boost nationwide housing affordability in the first quarter of 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 61.6 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $71,900. This is up from the 59.6 percent of homes sold that were affordable to median-income earners in the fourth quarter of 2017.

Average mortgage rates jumped by nearly 30 basis points in the first quarter to 4.34 percent from 4.06 percent in the fourth quarter of 2017.

Of the 237 metropolitan areas recorded in the first quarter HOI, 167 markets registered a gain in affordability from the fourth quarter of 2017, 68 posted a loss and two were unchanged.

Youngstown-Warren-Boardman, Ohio-Pa., was the nation’s most affordable major housing market. There, 90.9 percent of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $60,100. Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable smaller market, with 98.5 percent of homes sold in the first quarter being affordable to families earning the median income of $55,500.

San Francisco, for the second straight quarter, was the nation’s least affordable major market. There, just 9.2 percent of the homes sold in the first quarter of 2018 were affordable to families earning the area’s median income of $119,600.

All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 10.7 percent of all new and existing homes sold were affordable to families earning the area’s median income of $69,100.

Visit nahb.org/hoi  for tables, historic data and details.



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