National housing affordability at ten-year low

​​​​​WASHINGTON – A modest increase in interest rates and home prices kept housing affordability at a ten-year low in third quarter 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 56.4 percent of homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $71,900. This is the lowest reading since mid-2008.

The national median home price edged up from $265,000 in second quarter 2018 to $268,000. This is the highest quarterly median price in the history of the HOI series. 

Average mortgage rates rose in the third quarter to 4.72 percent from 4.67 percent.

"Continuing home price appreciation and rising interest rates coupled with persistent labor shortages are contributing to housing affordability concerns," said NAHB Chairman Randy Noel. "Builders are increasingly focusing on managing home construction costs so they do not outpace wage gains."

According to NAHB Chief Economist Robert Dietz, jobs and economic growth provide a solid backdrop for housing demand amid affordability declines. 

"However, housing affordability will need to stabilize to keep forward momentum from diminishing as we move into the new year," he said.