Housing Affordability Expectations Dip Amid High Prices, Mortgage Rates
Affordability expectations worsened between the first and second quarters of 2023 as high home prices and rising mortgage rates continued to price a growing number of homebuyers out of the for-sale market
July 31, 2023
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After a slight improvement in the first quarter of 2023, buyers’ outlook for housing affordability dipped once again in the second quarter due to ongoing affordability concerns in the for-sale market. The latest Housing Trends Report from NAHB revealed that 76% of buyers in Q2 2023 could afford less than half the homes for-sale in their markets, up from 73% in the first quarter, but the share able to afford most homes available fell from 27% to 24%.
Elevated home prices and rising mortgage rates are creating lingering challenges for buyers and deteriorating affordability expectations in nearly every U.S. region. The share of buyers able to afford less than half the homes available grew from 73% to 81% in the Midwest, 76% to 79% in the South, and 66% to 72% in the West, NAHB Eye on Housing reports.
The shift provides evidence that recent upticks in home prices and mortgage rates are filtering directly into home buyers’ affordability expectations.
The only exception was the Northeast, where the share declined from 75% to 69%, i.e., fewer buyers were able to afford only a minority of the inventory available.
