Housing Affordability Holds Steady at a 10-Year Low in the Fourth Quarter
A modest increase in interest rates offset a slight decline in home prices to keep housing affordability essentially level in the fourth quarter of 2018 and still hovering at a 10-year low, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
In all, 56.6 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $71,900. This is little changed from the 56.4 percent of homes sold in the third quarter that were affordable to median-income earners.
The national median home price moved down from $268,000 in the third quarter of 2018 to $263,000 in the fourth quarter. At the same time, average mortgage rates rose by 17 basis points in the fourth quarter to 4.89 percent from 4.72 percent in the third quarter. This was the fourth straight quarterly rate hike and the highest rate level since the second quarter of 2011.