Housing affordability hits record low in Q4 2022 National Association of Home Builders/Wells Fargo Housing Opportunity Index Released on Thursday.
At the end of the fourth quarter, the index stood at its lowest level since the NAHB began tracking the data on a consistent basis in 2012. Despite this, the NAHB is optimistic that the recent decline in mortgage rates over the past two months may indicate. Affordability conditions may have reached their low point for this cycle of the housing market.
“Rising mortgage rates, supply chain disruptions, higher construction costs and a shortage of skilled workers and more contributed to the housing market downturn and worsening affordability conditions in the second quarter of last year,” said Alicia Huey, president of NAHB. in a statement. “But we expect an improved affordability environment in the coming months, with mortgage rates already registering a modest decline since the beginning of the year and the Federal Reserve expecting an interest rate cut by the end of the first quarter.” will end its latest streak of hikes.”
In the fourth quarter, only 38.1% of new and existing homes sold were affordable for households with the US median income of $90,000. According to the NAHB, this is the third consecutive quarterly decline since the Great Recession and the third straight quarterly record low for housing affordability.
Last quarter, 42.2% of homes sold were affordable to households earning the US median income.
Although the national median home price fell to $370,000 in Q4, it was still the third highest median price in NAHB’s series history. An all-time high of $390,000 was set for Q2 2022. In addition, average mortgage rates reached an all-time high of 6.80% in the fourth quarter as well.
“With mortgage rates expected to continue declining later this year, affordability conditions are expected to improve, and this will drive demand and bring more buyers back into the market,” NAHB chief economist Robert Dietz said in a statement. ” “Ultimately, the best way to bring down the cost of housing is for policymakers to implement the right policies that help builders create more affordable housing by fixing broken supply chains, easing excessive regulations, and ensuring adequate liquidity in the housing market.” will be allowed to be made.”
Indianapolis-Carmel-Anderson, Indiana, topped the list of most affordable major housing markets (population over 500,000) in Q4, as 75.9% of all new and existing homes sold during the quarter earned the area’s median income of $94,100 Affordable for families. ,
Rochester, New York, Pittsburgh, Pennsylvania, Toledo, Ohio and Dayton-Kettering, Ohio rounded out the top five.
The top five least affordable major housing markets in Q4 were all in California and included: Los Angeles-Long Beach-Glendale, Anaheim-Santa Ana-Irvine, San Diego-Chula Vista-Carlsbad, San Francisco-San Mateo-Redwood City , and San Jose–Sunnyvale–Santa Clara. This is the ninth consecutive quarter Los Angeles-Long Beach-Glendale tops the list, with just 2.2% of homes sold during the fourth quarter being affordable to households earning the metro’s median income of $91,100.
When it comes to small markets, Bay City, Michigan was the nation’s most affordable small market in the fourth quarter, with 88.5% of all homes sold in Q4 being affordable to households earning the metro’s median income of $74,800. On the other end of the spectrum, Salinas, California was the least affordable small housing market, with only 5.0% of all homes sold during the fourth quarter being affordable for families earning the area’s median income of $90,100.
