Housing affordability is holding at the lowest level in nearly a decade, while higher home prices offset low mortgage rates that are keeping the affordability rate flat in the third quarter.

According to the NAHB/Wells Fargo Housing Opportunity Index(HOI) that was released, 56.6 percent of new and existing homes sold between July and September were affordable to families earning the U.S. median income of $79,900, making this the lowest affordability level since the beginning of the revised series in the first quarter of 2012.

 

"Persistent building material supply chain bottlenecks and tariffs on Canadian lumber and Chinese steel and aluminum continue to place upward pressure on construction costs and home prices," said NAHB Chairman Chuck Fowke, "Policymakers must fix supply chain vulnerabilities that are disrupting and delaying construction projects and hurting housing affordability."

The HOI shows that the national median home price increased to a record $355,000 in the third quarter which is up $5,000 from the second quarter and up $35,000 from the first. Meanwhile, average mortgage rates fell 14 basis points in the third quarter to 2.95 percent from 3.09 percent in the second quarter.

"Interest rates are anticipated to gradually rise in the coming months as the Fed begins to taper its monthly bond and mortgage-backed securities purchases," said NAHB Chief Economist Robert Dietz. "To keep affordability problems from worsening in the future, policymakers need to tackle supply-chain challenges that are hindering new home production. Helping builders boost output will also slow the rapid rise in home prices that has occurred over the past year."



https://nahbnow.com/2021/11/housing-affordability-holds-steady-but-supply-side-challenges-persist/