Chart: Housing Affordability Declines Sharply in Q2

Industry News,

Originally Published by: NAHB — August 10, 2023
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Rising home prices and interest rates coupled with elevated construction costs, low existing inventory and solid demand resulted in a significant decline in housing affordability during the second quarter of 2023.

According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 40.5% 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 $96,300.  This is down from 45.6% posted in the first quarter of this year, and the second-lowest reading since NAHB began tracking affordability on a consistent basis in 2012.

NAHB/Wells Fargo Housing Opportunity Index

The HOI shows that the national median home price increased to $388,000 in the second quarter, up from $365,000 in the previous quarter. Meanwhile, average mortgage rates rose from 6.46% to 6.59% during this period.

The top five most affordable major housing markets in the second quarter of 2023 were:

  1. Lansing-East Lansing, Mich.
  2. Scranton-Wilkes-Barre, Pa.
  3. Harrisburg-Carlisle, Pa.
  4. Indianapolis-Carmel-Anderson, Ind.
  5. Pittsburgh, Pa.

Top five least affordable major housing markets—all located in California:

  1. Los Angeles-Long Beach-Glendale
  2. Anaheim-Santa Ana-Irvine
  3. San Diego-Chula Vista-Carlsbad
  4. Oxnard-Thousand Oaks-Ventura
  5. San Francisco-San Mateo-Redwood City

Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable small market, with 95.5% of homes sold in the second quarter being affordable to families earning the median income of $89,900.

The top five least affordable small housing markets were also in the Golden State. Tied at the very bottom of the affordability chart were Salinas, Calif., and San Luis Obispo-Paso Robles, Calif., where 6.5% of all new and existing homes sold in the second quarter were affordable to families earning the area median income of $100,400 in Salinas and $113,100 in San Luis-Obispo-Paso Robles.

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