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NAHB: Home Affordability at Highest Level in 3 Years

With low unemployment and mortgage rates that hit a three-year low in the third quarter, more average American workers can now afford the average American home.

WASHINGTON – With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 63.6% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $75,500 – up from the 60.9% of homes sold in the second quarter of 2019 affordable to median-income earners and slightly higher than a first quarter 2019 reading of 62.6.

The national median home price remained steady at $280,000 in the third quarter, flat from the previous quarter but a jump from the first quarter when the median price was $260,000. At the same time, average mortgage rates fell from 4.07% in the second quarter to 3.73% in the third quarter, reaching a three-year low.

“With mortgage rates at historic lows, consumers are experiencing greater buying power and increased affordability,” says NAHB Chairman Greg Ugalde. “Despite this positive development, builders still struggle with rising construction costs due to labor shortages and excessive regulations, which will continue to make housing affordability a major challenge.”

“While the Federal Reserve’s monetary policy has helped offset some of the rising construction costs, these headwinds are still affecting builders’ ability to increase inventory, particularly for entry-level buyers,” adds NAHB Chief Economist Robert Dietz. “These higher production costs and other factors have caused a major decline in housing affordability over the past few years, and we expect that to remain a concern going forward.”

In the third quarter, Scranton-Wilkes-Barre-Hazleton, Pa., was the nation’s most affordable major housing market – 89.3% of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $67,000. Monroe, Mich., was the nation’s most affordable smaller market, with 95.3% of homes sold in the third quarter affordable to families earning the median income of $79,000.

San Francisco again ranked as the nation’s least affordable major market. There, just 8.4% of the homes sold in the third quarter of 2019 were affordable to families earning the area’s median income of $133,800. Other major metros at the bottom of the affordability chart were located in California.

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