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According to the recently-released National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) home affordability went down in the second quarter of 2017. The rise in home prices counteracted a drop in mortgage rates to continue complicating issues for homebuyers.
- 4 percent of new and existing homes were affordable to families earning the U.S. median income of $68,000 in the second quarter of 2017
- In the first quarter of 2017 60.3 percent of homes were affordable
- National median home price increased to $256,000 in the second quarter from $245,000 in the first quarter of 2017
- The average mortgage rate dropped 25 basis points in the second quarter to 4.08 percent from 4.33 percent in the first quarter of 2017
“The job market continues to gain steam and this is boosting housing demand,” said NAHB Chief Economist Robert Dietz. “Meanwhile, growing incomes and attractive mortgage rates are helping to keep housing affordable by partially offsetting ongoing home price appreciation. Home prices will continue to rise as inventory remains tight. NAHB expects the housing market will continue to make gradual gains in 2017.”
As recent U.S. Census Bureau data shows, the 63.6 percent homeownership rate in the first quarter of 2017 was not statistically different from the 63.7 percent rate in the second quarter of 2017 or the 63.5 percent rate in the first quarter of 2016.
Fluctuating mortgage rates assist in offsetting high home prices, but with housing affordability at the lowest level since the third quarter of 2008—according to the NAHB/Wells Fargo index—hopeful homebuyers continue facing a daunting hurdle.