Soaring building material costs, high demand and low inventories have added tens of thousands of dollars to the price of a new home and pushed housing affordability nationwide to its lowest level in nearly a decade in the second quarter of 2021.
And while affordability is also on the decline in the Washington area, more people are able to purchase typical homes than in many other parts of the country.
According to the recently released National Association of Home Builders (NAHB) / Wells Fargo Housing Opportunities Index (HOI), 56.6% of new and existing homes sold between early April and late June were affordable for earning families. the median American income of $ 79,900.
This is a sharp drop from the 63.1% of homes sold in the first quarter of 2021 and the lowest level of affordability since the start of the revised series in the first quarter of 2012.
“Uncontrolled growth in construction costs, such as the still high prices of oriented strand board which have climbed nearly 500% since January 2020, continues to put upward pressure on home prices,” said NAHB President Chuck Fowke, a custom builder from Tampa.
âA recent analysis from the NAHB shows that the higher costs of lumber products have added almost $ 30,000 to the price of an average new single-family home,â said NAHB Chief Economist Robert Dietz. âWith more than a million homes in the U.S. housing market below what is needed to meet the nation’s demand, policymakers need to focus on supply-side solutions that will enable builders to increase housing production and curb the rise in housing prices. “
The HOI report notes that the national median home price hit a record high of $ 350,000 in the second quarter, up $ 30,000 from the first quarter. This is the largest quarterly price increase in the history of this series.
At the same time, average mortgage rates rose 13 basis points in the second quarter to 3.09%, from 2.96% in the first quarter. More recently, however, mortgage rates stood at 2.8%, which has supported housing demand in recent weeks.
In the Washington area, 70 percent of all homes on the market were affordable to those earning the median household income. While this is down from 76.6% in the first quarter of 2021, it is in line with traditional standards dating back to the origin of the survey.
Pittsburgh was the most affordable real estate market in the country, defined as a subway with a population of at least 500,000. In Pittsburgh, 90.6% of all new and existing homes sold in the second quarter were affordable for families earning the area’s median income of $ 84,800.
Lansing-East Lansing, Michigan, completed the top five affordable housing markets; Youngstown-Warren-Boardman, Ohio-Pa .; Scranton-Wilkes-Barre-Hazleton, Pennsylvania; and Harrisburg-Carlisle, Pennsylvania.
Meanwhile, Cumberland-Md.-W.Va., Has been ranked as the smallest, most affordable market in the country, with 94 percent of homes sold in the second quarter being affordable for families earning the median income of 60,800. $.
Smaller markets joining Cumberland at the top of the list included Davenport-Moline-Rock Island, Iowa-Ill .; Sierra Vista-Douglas, Arizona; Lexington Park, Maryland; and Fairbanks, Alaska.
For the third consecutive quarter, Los Angeles-Long Beach-Glendale, Calif., Remained the least affordable major real estate market in the country. There, only 8.4 percent of homes sold in the second quarter were affordable for families earning the area’s median income of $ 78,700.
In fact, the top five least affordable markets were all located in California. In descending order after Los Angeles: San Francisco-Redwood City-South San Francisco; Anaheim-Santa Ana-Irvine; San Diego-Carlsbad; and Oxnard-Thousand Oaks-Ventura rounded out the top five.
Four of the five least affordable small housing markets were also in the Golden State. However, at the very bottom of the affordability table was Corvallis, Oregon, where 7.2 percent of all new and existing homes sold in the second quarter were affordable for families earning the region’s median income of $ 93,000. .
In descending order, other small markets at the lower end of the affordability scale included Salinas, California; Napa, California; Santa Cruz-Watsonville, California; and San Luis Obispo-Paso Robles-Arroyo Grande, California.
Full details and data can be found at www.nahb.org/hoi for tables, historical data and details.