Housing Affordability Dips in First Quarter
Housing affordability slipped slightly from the fourth quarter of 2020 to the first quarter of 2021 due to building material costs, supply shortages, and mortgage rate increases, says the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Opportunity Index found 63.1% of new and existing homes sold during the first quarter of 2021 were affordable to households earning the median U.S. income of $79,900. Compared to the fourth quarter of 2020, affordability dipped 0.2%. Both quarters posted the same median home price of $320,000 but the average mortgage rate did increase 11 basis points to 2.96% in 2021 from 2.85%.
Lansing-East Lansing, Mich., was the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. In Lansing-East Lansing, 91.8 percent of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $79,100.
Meanwhile, Cumberland-Md.-W.Va., was rated the nation’s most affordable smaller market, with 97.5 percent of homes sold in the first quarter being affordable to families earning the median income of $60,800.
For the second consecutive quarter, Los Angeles-Long Beach-Glendale, Calif. remained the nation’s least affordable major housing market. There, just 11.6 percent of the homes sold during the first quarter were affordable to families earning the area’s median income of $78,700.