Building material supply chain disruptions, high inflation, and soaring home prices have sent housing affordability to its lowest level since the National Association of Home Builders (NAHB) began tracking it in 2012, NAHB reports. As the housing market inches closer to a recession, the Federal Reserve is raising its rates to slow buyer demand, and a subsequent slowdown in home sales is hurting builders too.
Builder sentiment has fallen for 10 consecutive months amid elevated mortgage rates and historically high home prices, but the NAHB/Wells Fargo Housing Opportunity Index (HOI) shows that the national median home price slipped from $390,000 to $380,000 in the third quarter of the year.
According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 42.2% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $90,000. This marks the second consecutive quarterly record low for housing affordability since the Great Recession, trailing the previous mark of 42.8% set in the second quarter.
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