By: The Working Forest Staff
NAHB Eye on Housing — Despite low-interest rates, a supply shortage coupled with rising home prices contributed to a decline in housing affordability in the second quarter of 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
In all, 59.6 percent of new and existing homes sold between the beginning of April and the end of June were affordable to families earning an adjusted U.S. median income of $72,900. This is down from 61.3 percent of homes sold in the first quarter of 2020 that were affordable to median-income earners and the lowest reading since the fourth quarter of 2018.
HOI calculations use median family income estimates from the Department of Housing and Urban Development (HUD). However, HUD’s estimates for 2020 were developed prior to the COVID-19 pandemic. To account for the pandemic’s effects, estimates were adjusted consistent with NAHB’s economic forecast for 2020. As a result, the 2020 median income estimates used in HOI calculations are 7.1 percent lower than the initial 2020 estimates produced by HUD.
The HOI shows that the national median home price jumped to a record $300,000 in the second quarter from $280,000 in the previous quarter. Meanwhile, average mortgage rates fell by 27 basis points in the second quarter to 3.34 percent from 3.61 percent in the first quarter.
Scranton-Wilkes Barre-Hazleton, Pa., was rated the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. There, 89.1 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $66,600. Meanwhile, Cumberland-Md.-W.Va. was rated the nation’s most affordable smaller market, with 96.9 percent of homes sold in the second quarter being affordable to families earning the median income of $57,500.
San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 8.5 percent of the homes sold during the second quarter were affordable to families earning the area’s median income of $129,200.
All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 16.1 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $75,800.
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