National housing affordability relatively unchanged in 4Q 2018

​​​​​​WASHINGTON – A modest increase in interest rates offset a slight decline in home prices to keep housing affordability essentially level in fourth quarter 2018 and still hovering at a ten-year low, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 56.6 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 $71,900. This is slightly up from the 56.4 percent of homes sold in the third quarter that were affordable to median-income earners.

The national median home price moved down from $268,000 in third quarter 2018 to $263,000 in the fourth quarter. 

At the same time, average mortgage rates rose by 17 basis points in the fourth quarter to 4.89 percent from 4.72 percent. This was the fourth straight quarterly rate hike and the highest rate level since second quarter 2011.

“Builders are finding it increasingly difficult to build at price points most consumers need because they are struggling with burdensome regulations, higher material costs and shortages of lots and labor,” said NAHB Chairman Randy Noel. “Historically, housing has been the canary in the coal mine, and these ongoing affordability woes should serve as a wake-up call to policymakers to take immediate action.”

Youngstown-Warren-Boardman, Ohio-Pa. was the nation’s most affordable major housing market. There, 92.7 percent of homes sold were affordable to families earning the area’s median income of $60,100.

San Francisco, for the fifth straight quarter, was the nation’s least affordable major market. Just 6 percent of homes sold were affordable to families earning the area’s median income ($116,400).

The Real Estate Center has more Texas housing affordability data ​online.