National home affordability holds steady in first quarter

​​​​​​​​​​​WASHINGTON – ​​Lower home prices, declining mortgage rates, and solid income gains contributed to a rise in housing affordability in first quarter 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). 

However, the HOI was little changed on a year-​​over-year basis as homebuyers continue to face limited inventory, especially among starter homes.

Last quarter, 61.4 percent of new and existing homes sold were affordable to families earning the U.S. median income of $75,500. This is up from the 56.6 percent of homes sold in fourth quarter 2018 that were affordable to median-income earners and relatively unchanged compared with a first quarter 2018 reading of 61.6 percent.

As home price gains slowed during 2018, the national median home price moved down from $262,500 in fourth quarter 2018 to $260,000. At the same time, average mortgage rates fell by 25 basis points in the first quarter to 4.64 percent.

"While the recent rise in affordability is welcome news, builders continue to struggle with rising construction and development costs stemming from excessive regulations, a lack of buildable lots, and a shortage of construction workers," said NAHB Chairman Greg Ugalde. "This means that housing affordability is going to continue to be a challenge throughout 2019, particularly in high-cost markets."

The cost of homeownership is more than just the price to buy a home. ​Read more in "Keeping House: Location's Impact on Homeownership Affordability,​" by Center Research Economist Dr. Ali Anari.