Housing affordability plunged to its lowest level in almost 10 years in the second quarter, as building-materials costs, high demand and low inventory contributed to the largest quarterly increase in the national median home price on record.
Just 56.6% of homes sold during the quarter were affordable to families earning the U.S. median income of $79,900, according to the National Association of Homebuilders/Wells Fargo Housing Opportunity Index. That level is down sharply from the first quarter, when 63.1% of homes were considered affordable.
“Recent NAHB analysis shows that higher costs for lumber products have added nearly $30,000 to the price of an average new single-family home and raised the rental price of a new apartment unit by more than $90,” NAHB chief economist Robert Dietz said in a release, which pegged the median home price at a record $350,000. “With the U.S. housing market more than one million homes short of what is needed to meet the nation’s demand, policymakers need to focus on supply-side solutions that will enable builders to increase housing production and rein in rising home prices.”
Average mortgage rates increased 13 basis points in the second quarter to 3.09% from 2.96% in the first quarter. However, the NAHB said, mortgage rates have since fallen to 2.8%.
Pittsburgh was the most-affordable major housing market in the U.S., with 90.6% of new and existing homes sold in the second quarter within reach of families earning the local median income of $84,800.
Los Angeles-Long Beach-Glendale, Calif., remained the nation’s least-affordable major housing market for the third quarter in a row, with just 8.4% of the homes sold during the second quarter considered affordable to families earning the area’s median income of $78,700.