Rising home prices and interest rates pushed housing affordability to a 10-year low in the second quarter of 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
In all, 57.1 percent of new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $71,900. This is down from the 61.6 percent of homes sold in the first quarter that were affordable to median-income earners and the lowest reading since mid-2008.
The national median home price jumped from $252,000 in the first quarter of 2018 to $265,000 in the second quarter — the highest quarterly median price in the history of the HOI series. At the same time, average mortgage rates jumped by more than 30 basis points in the second quarter to 4.67 percent from 4.34 percent in the first quarter.
Although the strong economic expansion in the second quarter will support housing demand in the second half of the year, the expectation for higher mortgage rates and growing trade war concerns are additional headwinds negatively affecting housing affordability.
Syracuse, N.Y. was the nation’s most affordable major housing market. There, 89.1 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $74,100. Meanwhile, the nation’s most affordable smaller market was also located in the Empire State. In Elmira, N.Y., 97 percent of homes sold in the second quarter were affordable to families earning the median income of $71,000.
San Francisco, for the third straight quarter, was the nation’s least affordable major market. There, just 5.5 percent of the homes sold in the second 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 9.8 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.