For a rising share of home buyers, housing affordability is improving. According to the Housing Trends Report for the final quarter of 2020, 38% of buyers are able to afford half or more of the homes available for-sale in their markets. A year earlier, that share was 21%. The increase is an indication that historically low mortgage rates continue to have a stronger impact on buyers’ perceptions of affordability than rising home prices. In contrast, the share of buyers who can afford fewer than half the homes available in their markets dropped from 79% to 61% during this period.
Between the fourth quarters of 2019 and 2020, the share of buyers who can afford half or more of the homes available rose significantly among Gen X (20% to 45%) and Millennial (19% to 41%) buyers, but remained essentially flat among Gen Z and Boomer buyers. Across regions, the share of buyers who can afford half or more of the homes available rose most significantly in the Northeast (24% to 52%) and the West (21% to 41%), but also (albeit more modestly) in the South (21% to 32%) and Midwest (17% to 26%).
* The Housing Trends Report is a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are not seasonally adjusted due to the short-time horizon of the series, and therefore only year-over-year comparisons are statistically valid. A description of the poll’s methodology and sample characteristics can be found here. This is the fourth in a series of six posts highlighting results for the fourth quarter of 2020. See previous posts on plans to buy, new vs. existing preference, and housing availability.