Contact us for instant answers.

We invite you to experience the Birchwood difference. Fill out the form to the right and a representative will contact you with more information.

Why Is Housing Affordability Declining?

11.11.2020

The National Association of Home Builders (NAHB) reported that housing affordability declined during the third quarter of 2020, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI).

This has been a difficult year for American home buyers searching for entry-level and affordable homes. Despite record-low interest rates, the combined impact of a housing inventory shortage and rising home prices has made it all the more challenging to find an affordable home as 2020 comes to a close. 

The NAHB stated that 58.3% of new and existing homes that were sold from the beginning of July to the end of September 2020 were affordable to “families earning an adjusted U.S. median income of $72,900.” This showed a decrease from 59.6% of homes that were sold in the second quarter of 2020 that were affordable for American households with this same income.

Mortgage rates fell to a record low of 3.05% in this year’s third quarter from 3.34% in the second quarter. These low rates likely were the driving force behind this year’s high demand for homes. The high demand coupled with the shortage of homes led home prices to skyrocket to “an all-time high of $313,000 in the third quarter, surpassing the previous record-high of $300,000 set in the second quarter,” according to the NAHB.

Despite the increase in overall housing prices across the United States, there are some metro areas that offer homes at a reasonable price. The NAHB reports that Lansing-East Lansing, Michigan and Scranton-Wilkes Barre-Hazleton, Pennsylvania are tied as the most affordable major housing markets in the country (with populations of 500,000 or more). In both metros,  89.4% of all new and existing homes sold during the third quarter of this year were affordable for families earning the median income for each metro area, which were $75,000 and $66,600, respectively.

During the same quarter, the least affordable major metro area in the country was San Francisco-Redwood City-South San Francisco, California. Only 9% of homes in this area were affordable for families with a median income of $130,900 in this year’s third quarter.

by Cristin Espinosa (via www.themreport.com)

Connect with us:

© Birchwood Credit Services 2020. Web Development by CommonPlaces Interactive

Contact|Privacy Policy|Site Map|Security & Technology