Home affordability took a bigger hit in the third quarter of 2020, down to nearly a two-year low. Historically low mortgage rates are not enough to help offset inventory shortages and rising home prices, says the National Association of Home Builders. From July to September, 58.3% of new and existing homes sold were affordable to families making an adjusted median income of $72,900—the lowest percentage since the fourth quarter of 2018. To compare, 59.6% of homes were affordable in the second quarter of 2020.
The HOI shows that the national median home price jumped 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. Meanwhile, average mortgage rates fell by 29 basis points in the third quarter to a record-low of 3.05 percent from 3.34 percent in the second quarter.
Lansing-East Lansing, Mich. and Scranton-Wilkes Barre-Hazleton, Pa., were tied as the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. In Lansing-East Lansing, 89.4 percent of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $75,000. Likewise, 89.4 percent of all new homes sold in Scranton-Wilkes Barre-Hazleton were affordable to families earning the area’s median income of $66,600.