Unsurprisingly, Housing Affordability Continues to Fall

2022-11-10T09:16:23-06:00

By Rose Quint on November 10, 2022 • Rising mortgage rates, high inflation, ongoing building material supply chain disruptions, and elevated home prices contributed to housing affordability falling – yet again – to its lowest point since the Great Recession in the third quarter of 2022. According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 42.2% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $90,000. This marks the second consecutive record low for housing affordability in more than a decade, trailing the previous mark of 42.8% set in the second quarter. While the HOI shows that the national median home price fell to $380,000 in the third quarter, it is still the second-highest median price in the series, after the $390,000 recorded in the previous quarter. Meanwhile, average mortgage rates reached a series high of 5.72% in the third quarter, up from 5.33% a quarter earlier. The top five most affordable major housing markets in the third quarter of 2022 were: Lansing-East Lansing, Mich. Indianapolis-Carmel-Anderson, Ind. Scranton-Wilkes-Barre, Pa. Toledo, Ohio Syracuse, N.Y. 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 Oxnard-Thousand-Oaks-Ventura San Francisco-San Mateo-Redwood City Meanwhile, Cumberland, Md.-W.Va. was rated the nation’s most affordable small market, with 92.1% of homes sold in the third quarter being affordable to families earning the median income of $71,300. The top five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, Calif., where 5.9% of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $90,100. Visit nahb.org/hoi  for tables, historic data and details. Related ‹ Mortgage Activity Remains Low Due to Market UncertaintyTags: housing affordability, housing economics

Unsurprisingly, Housing Affordability Continues to Fall2022-11-10T09:16:23-06:00

Share of Young Adults Living with Parents Declined in 2021

2022-11-04T08:19:16-05:00

By Natalia Siniavskaia on November 4, 2022 • Spurred by elevated savings early in the pandemic and encouraged by lower interest rates, rising numbers of young adults left parental homes in 2021. As a result, the share of young adults ages 25-34 living with parents or parents-in-law declined and now stands at 20.2%, according to NAHB’s analysis of the 2021 American Community Survey (ACS) Public Use Microdata Sample (PUMS). This is a substantial change and welcome reversal of the troublesome trend we have been tracking since the housing boom and bust of the mid-2000s. Traditionally, young adults ages 25 to 34 make up around half of all first-time homebuyers. Consequently, the number and share of young adults in this age group that choose to stay with their parents or parents-in-law has profound implications for household formation, housing demand and the housing market.The share of adults ages 25 to 34 living with parents reached its peak of 22% in 2017-2018. Even though an almost 2 percentage point drop in the share since then is a welcome development that the housing market has been waiting for, the share remains elevated by historical standards, with one in five young adults remaining in the parental homes. Two decades ago, less than 12% of young adults ages 25 to 34, or 4.6 million, lived with parents. The current share of 20.2% translates into 8.9 million of young adults living in homes of their parents or parents-in-law. Undoubtedly, the Covid-19 pandemic heightened the desire for more spacious, independent living. The “excess” savings accumulated early in the lockdown stages of the pandemic, when spending opportunities were limited, gave a financial boost to young adults who remained employed and helped with down payments for a house for those looking into homeownership. The low mortgage rate environment further helped making home ownership affordable. Stacking our estimates of the share of young adults living with parents against NAHB/Wells Fargo’s HOI data confirms that the rising share of young adults living with parents is associated with worsening affordability while improving housing affordability coincides with the declining share of 25-34 year old adults continuing to live in parental homes. Given the historically high nature of the recent interest rate hikes and inflation rates, it is doubtful the recent gains in independent living by adults ages 25-34 can be sustained in 2022 and near future. Related ‹ Number of Bathrooms in New Homes in 2021Tags: headship rates, housing, housing affordability, young adults living with parents

Share of Young Adults Living with Parents Declined in 20212022-11-04T08:19:16-05:00

How Lumber Prices are Affecting Homebuilders

2021-05-13T12:28:42-05:00

They say a picture can tell a thousand words. Well, this new visual representation of the impact of lumber pricing on homebuilders certainly fits. Published on May 8th by Visual Capitalist, the amazing infographic shows the impact of lumber

How Lumber Prices are Affecting Homebuilders2021-05-13T12:28:42-05:00

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