Housing Affordability Drops in First Quarter of 2020 Due to Economic Losses from the COVID-19 Pandemic

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), rising job losses in March, due to the COVID-19 pandemic, resulted in a decline in housing affordability in the first quarter of 2020. In all, 61.3% of new and existing homes sold between the beginning of January and end of March were affordable to families earning an adjusted U.S. median income of $72,900. This is down from the 63.2% of homes sold in the fourth quarter of 2019 that were affordable to households earning the median income of $75,500. The HOI reported that the national median home price held steady, edging up from $279,000 in the fourth quarter of 2019 to $280,000 in the first quarter of 2020. Meanwhile, average mortgage rates fell by 17 basis points in the first quarter to 3.61% from 3.78% in the fourth quarter.