Ever-hiking home prices have squeezed the U.S. housing affordability in the third quarter, according to the Housing Opportunity Index (HOI) report released by the National Association of Home Builders (NAHB) and Wells Fargo Thursday morning.
Between July and September, 61.4% of all new and existing homes sold on the market were affordable for families making the median income (about $65,700) in the U.S. This is down from the 62% posted in the second quarter of 2016, and is 0.8 percentage points lower than a year ago’s 62.2%. This is the fourth consecutive year that the HOI has decreased in the third quarter of a year.
“Regulatory restraints along with shortages of buildable lots and skilled workers are adding to the cost of new homes, which is putting upward pressure on home prices,” said NAHB Chief Economist Robert Dietz in a statement. “Though these factors have negatively affected the marketplace, affordability still remains positive.”
The national median home price increased from $240,000 in the second quarter to $247,000 in the third quarter, the highest price in nearly 10 years since 4Q2006. Meanwhile, average mortgage rates edged lower from 3.88% to 3.76% in the same period.
Attractive mortgage rates, rising incomes and growing household formation make this an excellent time to buy, noted Dietz.
“Historically low interest rates and firming job growth are positive indicators that housing markets across the nation will continue to gradually improve,” NAHB Chairman Ed Brady concluded in a statement. “Home prices, however, continue to be affected by the rising costs of construction, both in terms of land and labor.”
NAHB’s quarterly Housing Opportunity Index gauges the share of affordable housing on the market for families earning the national median income. A total of 229 metropolitan areas were covered in the research for the third quarter of 2016.
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