Data for all four quarters of 2017 show housing affordability remaining essentially flat throughout the year, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released today.
In all, 59.6 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $68,000. This is just slightly up from the 58.3 percent of homes sold that were affordable to median-income earners in the third quarter, and effectively the same rate as in the fourth quarter of 2016, when the HOI stood at 59.9 percent.
“Builder confidence and consumer demand remain strong, and this should help bring more buyers into the marketplace in the year ahead,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “At the same time, builders are working hard to keep home prices affordable as they continue to grapple with persistent labor and lot shortages, burdensome regulations and rising costs for building materials.”
“Ongoing job and economic growth coupled with tight inventories and rising household formations are boosting housing demand,” said NAHB Chief Economist Robert Dietz. “Meanwhile, NAHB has reduced its home price forecast this year to 2.9 percent as a result of the recently enacted tax reform legislation. While it will further boost economic activity, the new tax law is expected to contribute to price softness in some high-cost, high-tax markets now that deductions for income and property taxes are capped at $10,000 per year.”
The national median home price fell to $255,000 in the fourth quarter of 2017 from $260,000 in the previous quarter. Price changes in this series can sometimes diverge from other national measures due to the limited geographic scope of the underlying data. Meanwhile, average mortgage rates inched down four basis points in the fourth quarter to 4.06 percent from 4.1 percent in the third quarter.
Youngstown-Warren-Boardman, Ohio-Pa., and Syracuse, N.Y., tied as the nation’s most affordable major housing market. In both metros, 88.3 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the area’s median income of $54,600 and $68,000, respectively. Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable smaller market, with 96.9 percent of homes sold in the fourth quarter being affordable to families earning the median income of $53,900.
Rounding out the top five affordable major housing markets in respective order were Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes Barre-Hazleton, Pa.; and Columbia, S.C.