Housing Affordability in Q4 2021 Falls to its Lowest Level in a Decade

The National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) was released today (2-8-22) and reports that 54.2% of new and existing homes sold between October 1 and December 31, 2021 were affordable to families earning the U.S. median income of $79,900. This is down from the Q3 2021 reading of 56.6% and is at the lowest affordability level recorded since the revised HOI series began in Q1 of 2012.

By the numbers, the HOI reports that the national median home price increased in Q4 to a record $360,000. This is up $5,000 from Q3 of 2021 and $40,000 from Q1 of 2021. The average mortgage rates increased by 21 basis points in Q4 2021 to 3.16%, up from 2.95% in Q3. Currently, mortgage rates are running above 3.5%, and this expected higher trend will further impact affordability later this year.

In metro areas with a population of a least 500,000, Lansing-East Lansing, Michigan was ranked as the nation’s most affordable housing market. In small market metro areas, Cumberland, Maryland–West Virginia was rated as the most affordable small market area nationally. For the fifth straight quarter, Los Angeles-Long Beach-Glendale, California remained the nation’s least affordable major housing market.