Housing affordability in the first quarter of 2022 looks starkly different depending on the interest rate assumed in the calculation. The average mortgage interest rate for the quarter was 3.86%. But by the end of April, it was 5.11%. If the former is used, then housing affordability shows a modest gain in the first three months of the year, driven by a strong jump in incomes. If the latter is used, then housing affordability shows a significant decline, despite the jump in incomes.
Using the lower average quarterly rate (i.e. standard methodology), the NAHB/Wells Fargo Housing Opportunity Index (HOI) shows that 56.9% 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 $90,000. That would be an increase over the previous quarter’s 54.2%.
If the same calculation is repeated using the higher, more current rate instead, the HOI for the first quarter of 2022 would be 48.7%. That would be a decrease from the previous quarter’s 54.2% and the lowest affordability level recorded on the HOI since the beginning of the revised series in the first quarter of 2012.
The HOI shows that the national median home price increased to a record $365,000 in the first quarter of 2022, up $5,000 from the previous quarter and a whopping $45,000 from a year earlier. Median family income in the U.S., meanwhile, rose from $79,900 in 2021 to $90,000 in 2022.
The top five most affordable major housing markets in the first quarter of 2022 were:
- Lansing-East Lansing, Mich.
- Indianapolis-Carmel-Anderson, Ind.
- Scranton–Wilkes-Barre, Pa.
- Rochester, N.Y.
- Dayton-Kettering, Ohio
The top five least affordable major housing markets—all located in California:
- Los Angeles-Long Beach-Glendale
- Anaheim-Santa Ana-Irvine
- San Francisco-San Mateo-Redwood City
- San Diego-Chula Vista-Carlsbad
Meanwhile, Wheeling, W.Va.-Ohio., was rated the nation’s most affordable small market, with 97.3% of homes sold in the first quarter being affordable to families earning the median income of $75,400.
The top five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, Calif., where 9.2% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $90,100.
Visit nahb.org/hoi for tables, historic data and details.