Rising construction costs have dropped housing affordability to its lowest level in a decade, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index released this week.
Just over 54% of new and existing homes sold between October and December were affordable to families earning the U.S. median income of $79,900, NAHB said. The rate is down from the 56.6% of homes sold in the third quarter of 2021 and is the “lowest affordability level recorded since the beginning of the revised series in the first quarter of 2012.”
“The HOI shows that the national median home price increased to a record $360,000 in the fourth quarter, up $5,000 from the third quarter and a whopping $40,000 from the first quarter,” the organization reported. “Meanwhile, average mortgage rates increased by 21 basis points in the fourth quarter to 3.16% from 2.95% in the third quarter. Currently, mortgage rates are running above 3.5%, and this higher trend will further affect affordability later this year.”