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

Bidding Wars Jump as Top Reason (Remaining) Buyers Can’t Make Purchase

2022-11-02T09:20:49-05:00

By Rose Quint on November 2, 2022 • An earlier post revealed that a record 70% of buyers who were actively engaged in the process of finding a home in the third quarter of 2022 have spent 3+ months searching for a home without success. Those buyers also have higher incomes and education levels than in previous quarters.  The most common reason these long-term searchers cite for not having bought by now is they are getting outbid by other offers (54%).  In second place is the inability to find an affordable home (39%), followed by not being able to find a home in their desired neighborhood (30%). When asked what they are most likely to do next if still unable to find a home in the next few months, 50% of active buyers searching for 3+ months said they will continue looking for the ‘right’ home in the same location (up from 46% a quarter earlier); 35% will expand their search area (down from 38%), 33% will accept a smaller/older home (up from 30%), and 28% will buy a more expensive home (up from 26%). Meanwhile, the share who plan to give up their home search until next year or later climbed to 28%, up from 25% in the second quarter of 2022. This share has increased or remained flat in each of the past five quarters. ** Results come from the Housing Trends Report– a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the final post in a series of six highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy, new vs. existing preference, housing availability, housing affordability, and active buyers. Related ‹ September Private Residential Spending Stays FlatTags: housing economics, housing trends report

Bidding Wars Jump as Top Reason (Remaining) Buyers Can’t Make Purchase2022-11-02T09:20:49-05:00

Affordability Expectations Improve as the Typical Buyer Changes

2022-10-31T09:17:12-05:00

By Rose Quint on October 31, 2022 • Prospective buyers in the third quarter of 2022 are more likely to have higher levels of income and education than earlier in the year.  This helps explain why affordability expectations have improved.  In the third quarter of 2022, 69% of buyers could only afford a minority of homes for sale in their markets, a much lower share than in the first (81%) or second (77%) quarters of the year.  Conversely, the share able to afford at least half the homes available rose to 31%, up from 19% and 23% in the first two quarters of the year. Affordability expectations between the second and third quarters of 2022 improved in all regions.  In the Northeast, the share of buyers only able to afford a minority of homes dropped from 73% to 66%; in the Midwest, from 84% to 83%; in the South, from 82% to 77%, and in the West, from 70% to 58%.   **Results come from the Housing Trends Report– a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the fourth in a series of six posts highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy, new vs. existing preference, and housing availability. Related ‹ All-Cash New Home Sales Outnumber FHA-Backed for the First Time Since 2007Tags: housing economics, housing trends report

Affordability Expectations Improve as the Typical Buyer Changes2022-10-31T09:17:12-05:00

Buyers’ Expectations of Housing Availability Continue to Improve

2022-10-28T09:17:39-05:00

By Rose Quint on October 28, 2022 • For the second straight quarter, more prospective buyers expect housing availability to improve. In the third quarter of 2022, 37% of buyers expect the home search to get easier in the months ahead, up from 17% and 22% in the first and second quarters of the year, respectively. More for-sale inventory and less competition from buyers priced-out by higher mortgage rates are likely driving the improvement. In contrast, 59% expect the search to get harder/stay the same, down from 74% and 67% in the first two quarters of 2022. Housing availability expectations improved in all regions of the country in the third quarter of 2022. In the Northeast, 44% of buyers expect easier conditions, up from 28% in the second quarter. In the Midwest, the share rose from 14% to 33%; in the South, from 18% to 23%; and in the West, from 31% to 52%. Another way to measure buyers’ perceptions of housing inventory is to ask them if they are seeing more/fewer/the same number of homes for-sale* in their markets. In the third quarter of 2022, 36% reported seeing more homes, up from 23% and 28% in the first two quarters of the year. Inventory perceptions have improved across all regions. From the second to the third quarters of 2022, the share of buyers seeing more homes on the market rose in the Northeast (27% to 43%), Midwest (23% to 30%), the South (24% to 33%), and West (36% to 42%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the third in a series of six posts highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy and new vs. existing preference. Related ‹ Economic Growth and Signs of Cooling Inflation in Third QuarterTags: housing availability, housing economics, housing trends report

Buyers’ Expectations of Housing Availability Continue to Improve2022-10-28T09:17:39-05:00

More Buyers Taking a Look at New Construction

2022-10-26T19:15:13-05:00

By Rose Quint on October 25, 2022 • After bottoming out at 19% in the first quarter of 2022, the popularity of new homes continues to rebound, as the share of buyers looking for new construction rose to 21% and 27% in the second and third quarters of the year, respectively.  A possible factor behind this trend is that the inventory of new homes for-sale is 25% higher than a year ago, while the supply of existing homes on the market is unchanged. The recent increase in interest for new homes is countrywide.  From the second to the third quarters of 2022, the share of prospective buyers looking to purchase a new home rose in all four regions: Northeast (18% to 27%), Midwest (12% to 18%), South (20% to 26%), and West (30% to 31%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the 3rd quarter of 2022.  See previous post on plans to buy. Related ‹ Prospect of Higher Rates Leads Some to Consider Buying a HomeNew Home Sales Fall Back in September ›Tags: housing economics, housing trends report

More Buyers Taking a Look at New Construction2022-10-26T19:15:13-05:00

Prospect of Higher Rates Leads Some to Consider Buying a Home

2022-10-24T09:17:34-05:00

By Rose Quint on October 24, 2022 • The share of adults planning a home purchase within a year rose to 15% in the third quarter of 2022, up from 13% in the first half of the year. The marginal increase suggests that the prospect of higher mortgage rates in the near term may be leading a small segment of consumers to consider the purchase of a home sooner rather than later. It is important to note that the typical prospective buyer in the third quarter had higher levels of education and income than the typical buyer earlier in 2022. Sixty-six percent of those contemplating a home purchase are first-time home buyers, up from 59% in the second quarter. The increase marks a sharp reversal, following three quarters of declines in the share of prospective buyers considering homeownership for the first time. The share of adults with plans to buy a home changed unevenly across regions from the second to the third quarter of 2022, rising in the Northeast (12% to 15%) and West (16% to 20%), but falling in the Midwest (11% to 9%) and South (15% to 14%). Over half of all prospective buyers in every region are 1st-timers. From the second to the third quarter of 2022, the share rose most prominently in the Northeast (54% to 70%) and West (60% to 70%), and marginally in the Midwest (54% to 56%) and South (62% to 66%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the first in a series of six posts highlighting results for the 3rd quarter of 2022. Related ‹ Employment Situation in September: State-Level AnalysisTags: housing economics, housing trends report

Prospect of Higher Rates Leads Some to Consider Buying a Home2022-10-24T09:17:34-05:00

Percent Share of 5,000+ Square Foot Homes Rises in 2021

2022-09-15T10:16:25-05:00

By Ashok Chaluvadi on September 15, 2022 • According to the annual data from the Census Bureau’s Survey of Construction (SOC), the share of new homes started with 5,000 square feet or more of living space stood at 2.90 percent in 2021, up from 2.50 percent in 2020.  A total of 33,000 5,000+ square-foot homes were started in 2021, compared to 25,000 in 2020.  The increase in number and share of  5,000+ square foot homes is consistent with the rising trend in median and average size of new single-family homes seen during the pandemic. In 2015, the number of 5,000+ square feet homes started was the highest since 2007, and their share of the new market was the highest since the inception of the series in 1999. In the boom year of 2006, 3.0 percent or 45,000 new homes started were 5,000 square feet or larger. In 2007, the share of new homes that large increased to 3.6 percent while the total number that year fell to 37,000. In 2008, only 20,000 such homes were started, or 3.2 percent of the total.  From 2009 to 2012, the number of these large homes started remained well under 20,000 a year, accounting for less than 3 percent of single-family construction during this period. When analyzed by the different characteristics, 82 percent of 5,000+ square feet home started in 2021 have a porch, 74% have a finished basement, 68 percent each have a patio, 66 percent have a 3-or-more car garage, 63 percent have 4 bathrooms or more, 59 percent have a community association and 55 percent have 5 bedrooms or more. Related ‹ Gypsum Products, Transformers, and Concrete Prices Post Historic 12-Month IncreasesTags: construction, economics, eye on the economy, home building, housing economics, housing trends report, single-family

Percent Share of 5,000+ Square Foot Homes Rises in 20212022-09-15T10:16:25-05:00

Stucco and Vinyl were the Most Common Siding Materials on New Homes in 2021

2022-08-29T10:19:17-05:00

By Ashok Chaluvadi on August 29, 2022 • According to the annual data from the Census Bureau’s Survey of Construction (SOC), stucco was the most common principal siding material on new single-family homes started in 2021 (28 percent),  followed by vinyl siding (24 percent), fiber cement siding (such as Hardiplank or Hardiboard (23 percent) and, brick or brick veneer (19 percent). Far smaller shares of single-family homes started last year had wood or wood products (4 percent) and stone, rock or other stone materials (1 percent) as the principal exterior wall material. The Census Bureau’s SOC data is available by the nine census divisions and there are substantial differences in the use of siding across divisions. Although stucco was the most common siding material in the country as a whole, its popularity is concentrated in a few parts of the country. In 2021, vinyl siding was the most widely used primary exterior material in four northern census divisions. Vinyl siding was used on 74 percent of the new homes started in the Middle Atlantic, 66 percent in New England, 63 percent in the East North Central and 45 percent in the West North Central. Stucco was the most commonly used primary exterior wall material in the Pacific, Mountain and South Atlantic divisions in 2021: 63 percent, 53 percent and 40 percent, respectively, of the new single-family homes started in those areas used it. Brick or brick veneer was the most common exterior siding material in East and West South Central divisions. In the West South Central, 62 percent of the new single-family homes started in 2021 used brick or brick veneer as the primary exterior material, compared to 42 percent in the East South Central. Related ‹ Student Housing Investment Edges Down in the Second Quarter of 2022Tags: Building Materials, construction, economics, eye on the economy, home building, housing economics, single-family

Stucco and Vinyl were the Most Common Siding Materials on New Homes in 20212022-08-29T10:19:17-05:00

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