According to the latest National Association of Home Builders (NAHB) / Wells Fargo Housing Opportunity Index (HOI), housing affordability modestly declined during Q1 of 2021. This is the result of rising material costs and supply shortages, along with increased mortgage rates, all of which signaled affordability challenges for the remainder of the year. The HOI reports that 63.1% of new and existing homes sold between the beginning of January through the end of March were affordable to families earning the U.S. median income of $79,900. This is down from the 63.3% of homes sold in Q4 of 2020, which were affordable to households earning the median income of $78,500. The HOI also shows that the national median home price held steady at $320,000 in Q1, unchanged from Q4 2020. Meanwhile, average mortgage rates increased by 11 basis points in the Q1 2021 to 2.96% from the previous all-time low of 2.85% in Q4 2020.
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Housing Affordability Shows Signs of Weakening as Challenges Lie Ahead