According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), 40.5% of new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $96,300. This is down from 45.6% posted in the first quarter of this year, and the second-lowest reading since NAHB began tracking affordability on a consistent basis in 2012.
Previous results
As another reminder of ongoing housing affordability challenges, the second quarter 2023 HOI reading remains lower than the second quarter 2022 score of 42.8%.
The HOI shows that the national median home price increased to $388,000 in the second quarter, up from $365,000 in the previous quarter. Meanwhile, average mortgage rates were 6.59% in the second quarter, up from 6.46% in the first quarter.
Regional data
The top five most-affordable major housing markets in the second quarter of 2023 were:
- Lansing-East Lansing, Michigan
- Scranton-Wilkes-Barre, Pennsylvania
- Harrisburg-Carlisle, Pennsylvania
- Indianapolis-Carmel-Anderson, Indiana
- Pittsburgh, Pennsylvania
The top five least-affordable major housing markets were all located in California:
- Los Angeles-Long Beach-Glendale, California
- Anaheim-Santa Ana-Irvine, California
- San Diego-Chula Vista-Carlsbad, California
- Oxnard-Thousand Oaks-Ventura, California
- San Francisco-San Mateo-Redwood City, California
NAHB’s take on the data
“While builders continue to face a number of affordability challenges, including a shortage of distribution transformers, elevated construction costs and a lack of skilled workers, they remain cautiously optimistic about market conditions,” says NAHB Chairman Alicia Huey. “A lack of existing inventory is fueling demand for new construction, and mortgage rates are expected to stabilize in the weeks and months ahead as the Federal Reserve nears the end of its tightening cycle.”
“Rising mortgage rates in 2023 that peaked near 7% recently have been a major factor in declining affordability conditions,” says NAHB Chief Economist Robert Dietz. “Given the Fed’s limited ability to address rising construction costs, the best way to satisfy unmet demand and ease the nation’s housing affordability crisis is to enact policies that will allow builders to construct more homes.”
