Housing Affordability Drops To 10-Year Low
Housing affordability hits a 10-year low according to a report by the NAHB
According to RisMedia, the NAHB association released its NAHB/ Well Fargo Housing Opportunity Index (HOI) report on Feb. 8, which found that 54.2% of new and existing homes sold between the start of October and the end of December were affordable to families earning the U.S. median income of $79,900. That marks the lowest affordability level recorded since the first quarter of 2012, according to NAHB experts.
“Supply chain disruptions stemming from labor shortages, to lumber, to home appliances and other building materials, are delaying construction times and contributing to higher home prices,” said NAHB chairman, Chuck Fowke, in a statement.
The report shows that the national median home price increased to a record $360,000 in the fourth quarter—up by $5,000 from the third quarter last year and $40,000 from the start of 2021.
At the same time, mortgage rates climbed from 2.95% in the third quarter to 3.16% in Q4. Based on recent Freddie Mac reports, rates have surpassed 3.5%, which NAHB notes will further affect affordability later this year.
Recent activity by the Federal Reserve, which could make its first of several interest rate hikes as early as March, won’t help the affordability situation either, according to NAHB chief economist, Robert Dietz.
“To help ease growing affordability problems, policymakers must take steps to help builders to increase production to meet strong demand and stem the rapid climb in home prices that has taken place over the past year,” Dietz said in a statement.
In a separate interview with RISMedia, Dietz also indicates that higher construction costs continue to challenge the ability of builders to reduce the large housing deficit the country faces, measuring at least one million homes as a shortfall.
https://www.rismedia.com/2022/02/09/housing-affordability-drops-10-year-low/
