Rising mortgage rates, higher construction costs, and limited current availability all contributed to housing affordability reaching its lowest level in more than a decade in the third quarter of 2023.
According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), only 37.4% of new and existing houses sold between the beginning of July and the end of September were affordable to families earning the national median income of $96,300.
This is a decrease from 40.5% in the second quarter of this year, and it is the lowest level since NAHB began measuring affordability on a consistent basis in 2012.
Based on the HOI, the national median home price remained stable in the third quarter at $388,000, unchanged from the previous quarter.
Meanwhile, average mortgage rates increased from 6.59% in the second quarter to 7.13% in the third quarter, the highest rate in the HOI series’ history.
In the third quarter of 2023, the top five most affordable major housing markets were:
- 1. East Lansing-Lansing, Michigan.
- 2. Youngstown, Warren, and Boardman, Ohio/Pa.
- 3. Lancaster-Harrisburg-Carlisle, Pa.
- 4. Indianapolis, Carmel, and Anderson, Ind.
- 5. Scranton-Wilkes-Barre/Scranton, Pa.
Top five most expensive major home markets in California:
- 1. Long Beach-Los Angeles-Glendale
- 2. Anaheim, Santa Ana, and Irvine
- 3. San Diego, Chula Vista, and Carlsbad
- 4. Oxnard, Thousand Oaks, and Ventura
- 5. Redwood City-San Francisco-San Mateo
Meanwhile, Cumberland, Md.-W.Va., was named the nation’s most cheap small market, with 93.7% of homes sold in the third quarter costing less than $89,900.
The Golden State also had the top five least inexpensive small home markets. Napa, California, was at the absolute bottom of the affordability ranking, with 4.2% of all new and existing homes sold in the third quarter being affordable to families earning the region median income of $129,600.