Chart: Rising Rates Push Housing Affordability to Record Lows
Originally Published by: NAHB — November 9, 2023
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Rising mortgage rates, elevated construction costs and limited existing inventory helped push housing affordability in the third quarter of 2023 to its lowest level in more than a decade.
According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), just 37.4% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $96,300. This is down from 40.5% posted in the second quarter of this year, and the lowest reading since NAHB began tracking affordability on a consistent basis in 2012.
The HOI shows that the national median home price held steady at $388,000 in the third quarter, unchanged from the previous quarter. Meanwhile, average mortgage rates jumped from 6.59% in the second quarter up to 7.13% in the third quarter – the highest rate in the HOI series history.
The top five most affordable major housing markets in the third quarter of 2023 were:
- Lansing-East Lansing, Mich
- .Youngstown-Warren-Boardman, Ohio-Pa.
- Harrisburg-Carlisle, Pa.
- Indianapolis-Carmel-Anderson, Ind.
- Scranton-Wilkes-Barre, Pa.
Top five least affordable major housing markets—all located in California:
- Los Angeles-Long Beach-Glendale
- Anaheim-Santa Ana-Irvine
- San Diego-Chula Vista-Carlsbad
- Oxnard-Thousand Oaks-Ventura
- San Francisco-San Mateo-Redwood City
Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable small market, with 93.7% of homes sold in the third 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. At the very bottom of the affordability chart was Napa, Calif., where 4.2% of all new and existing homes sold in the third quarter were affordable to families earning the area median income of $129,600.
Visit nahb.org/hoi for tables, historic data and details.
Note: The Housing Opportunity Index will be discontinued after the fourth quarter of 2023. A new housing affordability index from NAHB will begin in the first quarter of 2024.