Home buyer affordability falls in Q2
Home prices rise, affordability declines
The second quarter (Q2) saw housing affordability decline as home prices strengthened in much of country, the National Association of Home Builders (NAHB) said in a recent report.
According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 73.8 percent of all new and existing homes sold in Q2 were considered affordable. Affordability is calculated by considering families earning the national median income of $65,000.
In the first quarter (Q1), 77.5 percent of homes met the affordability criteria, a record high.
This large quarterly drop in affordability is directly connected to rising home prices across the country, the NAHB said, as 92 percent of metropolitan areas included in the latest HOI experienced housing price increases from Q1 to Q2.
Near-record-low mortgage rates continue to boost affordability, but rising home prices are beginning to offset those positives.
“While interest rates and overall housing affordability remain very favorable on a historic basis, the decline in the latest HOI is a positive development because it is another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace,” Barry Rutenberg, NAHB Chairman, said in a statement.
The major housing market boasting the highest affordability in Q2 was Youngstown-Warren-Boardman (OH), where 93.4 percent of homes sold met affordability criteria.
Other major housing markets registering high affordability marks in Q2 include: Dayton, Ohio; Buffalo-Niagara Falls, N.Y.; Indianapolis-Carmel, Ind.; and Modesto, Calif.
Fairbanks, Alaska achieved the highest affordability mark amongst smaller markets, as 98.7 percent of homes sold in Q2 were deemed affordable.