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Home Affordability Unchanged – But at a 10-Year Low

NAHB: A modest increase in interest rates offset a slight decline in home prices to keep housing affordability essentially level in the fourth quarter of 2018.

WASHINGTON – Feb. 14, 2019 – A modest increase in interest rates offset a slight decline in home prices to keep housing affordability essentially level in the fourth quarter of 2018 – but it’s still hovering at a 10-year low, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

Of all new and existing homes sold between the beginning of October and end of December, 56.6 percent were affordable to families earning the U.S. median income of $71,900. In the third quarter, it was 56.4 percent.

The national median home price moved down from $268,000 in the third quarter of 2018 to $263,000 in the fourth quarter. At the same time, average mortgage rates rose by 17 basis points in the fourth quarter to 4.89 percent from 4.72 percent in the third quarter – the fourth straight quarterly rate hike and the highest rate level since the second quarter of 2011.

“While solid job growth and rising household formations are fueling a demand for housing, home price appreciation has outpaced wage gains, putting a damper on housing affordability,” says NAHB Chief Economist Robert Dietz. “To keep housing moving forward, policymakers at all levels of government should make it a priority to address affordability concerns that are hurting homebuyers and home builders alike.”

Youngstown-Warren-Boardman, Ohio-Pa., supplanted Syracuse, N.Y., as the nation’s most affordable major housing market with 92.7 percent of all new and existing homes sold in the fourth quarter affordable to families earning the area’s median income of $60,100. Cumberland, Md.-W.Va., was rated the nation’s most affordable smaller market with 94.9 percent of homes affordable to families earning the median income of $55,500.

San Francisco, for the fifth straight quarter, was the nation’s least affordable major market with just 6 percent of homes sold in the fourth quarter affordable to families earning the area’s median income of $116,400.

©Florida Realtors® 
Reprinted with permission Florida Realtors. All rights reserved.

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Allen Thompson

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