Housing affordability reached an 18-month low in the second quarter of 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
Between the beginning of April and end of June, 59.6 percent of new and existing homes sold were affordable to families with a median income of $72,900. This is a decrease from the 61.3 percent of homes sold in the first quarter of 2020 that were affordable, and the lowest readying since Q4 of 2018.
Because HUD’s estimates for median family income for 2020 were set before the pandemic, the estimates used in the HOI calculations were adjusted to reflect a median price that’s 7.1 percent lower than the original number of $78,500.
“There was underbuilding before the pandemic hit, and the coronavirus outbreak has exacerbated the situation by disrupting existing supply chains,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Builders are particularly concerned over surging lumber prices that are up nearly 70 percent since mid-April.”
“Home prices appreciated robustly during the second quarter due to better-than-expected housing demand in the wake of the pandemic and because the coronavirus hindered the ability of builders to ramp up production,” said NAHB Chief Economist Robert Dietz. “Looking forward, in this record-low interest rate environment housing should be a bright spot for the economy as rising demand continues in the suburbs, exurbs and other lower density markets.”
The most affordable major housing market? Scranton-Wilkes Barre-Hazleton, Pa., in which 89.1 percent of all new and existing homes sold in the second quarter were affordable for median income earners of $66,600. according to the report. The most affordable small market was Cumberland-Md.-W.Va., in which 96.9 percent of homes were affordable with a median income of $57,500.
At the bottom of the affordability chart was San Francisco-Redwood City-South, Calif., in which only 8.5 percent of homes sold were affordable for a median income of $129,200.