Housing affordability plunges in Q2

Washington, DC – Rising building materials costs, high demand and low inventory have added tens of thousands of dollars to the price of a new home and pushed home affordability to its lowest level in nearly a decade in the second quarter of 2021. has fallen. to the National Association of Home Builders (NAHB).

According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 56.6% of new and existing homes sold between early April and late June were affordable to families earning the US median income of $79,900. This is well below the 63.1% of homes sold in the first quarter of 2021 and the lowest affordability level since the start of the revised series in the first quarter of 2012.

“Runaway construction cost growth, such as continued elevated prices for oriented strand boards, which have risen nearly 500% since January 2020, continue to exert upward pressure on housing prices,” said Chuck Fowke, president of NAHB. “Policymakers need to address supply chain bottlenecks for building materials that increase costs and hurt housing affordability.”

“Recent NAHB analysis shows that higher costs for wood products added nearly $30,000 to the price of an average new single-family home and increased the rent of a new apartment by more than $90,” said Robert Dietz, chief economist of NAHB. “With the U.S. housing market more than 1 million homes short of what it needs to meet the country’s demand, policymakers must focus on supply-side solutions that will enable builders to increase housing production and mitigate rising house prices. curb.”

The HOI shows that the national median home price rose to a record $350,000 in the second quarter, up $30,000 from the first quarter. This is the largest quarterly price increase in the history of this series. Meanwhile, average mortgage rates rose 13 basis points in the second quarter to 3.09% from 2.96% in the first quarter. However, the mortgage rate is currently at 2.8%, which has somewhat supported housing demand in recent weeks.

The most and least affordable markets

Pittsburgh, Pennsylvania was the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. In Pittsburgh, 90.6% of all new and existing homes sold in the second quarter were affordable to families earning the average income of $84,800 in the area.

Rounding out the top five affordable major housing markets in respective order were Lansing-East Lansing, Michigan; Youngstown-Warren-Boardman, Ohio-Pa.; Scranton-Wilkes-Barre-Hazleton, Pennsylvania; and Harrisburg-Carlisle, Pa.

Meanwhile, Cumberland-Md.-W.Va. rated as the nation’s most affordable smaller market, with 94.0% of homes sold in the second quarter being affordable to families earning the median income of $60,800. Smaller markets that topped the list at Cumberland included Davenport-Moline-Rock Island, Iowa-Ill.; Sierra Vista-Douglas, Arizona; California-Lexington Park, Maryland; and Fairbanks, Alaska.

For the third straight quarter, Los Angeles-Long Beach-Glendale, California, remained the country’s least affordable major housing market. There, only 8.4% of homes sold in the second quarter were affordable to families earning the median income of $78,700.

In fact, the top five least affordable major markets were all located in California. In descending order, San Francisco-Redwood City-South San Francisco; Anaheim-Santa Ana-Irvine; San Diego-Carlsbad; and Oxnard-Thousand Oaks-Ventura rounded out the top five.

Four of the five least affordable small housing markets were also located in the Golden State. At the very bottom of the affordability chart was Corvallis, Oregon, where 7.2% of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $93,000.

In descending order, other small markets at the lower end of the affordability scale include Salinas, California; Napa, California; Santa Cruz-Watsonville, California; and San Luis Obispo-Paso Robles-Arroyo Grande, California.

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