Solid nominal wage gains (unadjusted for inflation) combined with lower mortgage rates and home prices helped to boost housing affordability in the first quarter of 2023, but ongoing building material supply chain issues and expected cooling of wage growth signal ongoing concerns for affordability conditions in the year ahead.
According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 45.6% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $96,300. Although higher than in the final quarter of 2022 (38.1%), the latest HOI is still significantly lower than it was a year earlier (56.9%) – a reminder of ongoing housing affordability challenges.
The HOI shows that the national median home price fell to $365,000 in the first quarter, down from $370,000 in the final quarter of last year. Meanwhile, average mortgage rates were 6.46% in the first quarter, down from a series high of 6.80% in the fourth quarter. The U.S. median family income rose 7% from 2022 to 2023, from $90,000 to $96,300.
The top five most affordable major housing markets in the first quarter of 2023 were:
- Lansing-East Lansing, Mich.
- Scranton-Wilkes-Barre, Pa.
- Rochester, N.Y.
- Toledo, Ohio
- Pittsburgh, Pa.
Top five least affordable major housing markets—all located in California:
- Los Angeles-Long Beach-Glendale
- Anaheim-Santa Ana-Irvine
- San Diego-Chula Vista-Carlsbad
- San Francisco-San Mateo-Redwood City
- San Jose-Sunnyvale-Santa Clara
Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable small market, with 93.5% of homes sold in the first quarter being affordable to families earning the median income of $89,900.
The top five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Napa, Calif., where 6.6% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $129,600.
Visit nahb.org/hoi for tables, historic data and details.