Housing Affordability Rates Holds Steady in Q4 2020

According to the National Association of Home Builders (NAHB) / Wells Fargo Housing Opportunity Index (HOI) in Q4 of 2020, record-high homes prices were offset by record-low mortgage rates and as a result affordability rate held steady. However, supply-side and regulatory challenges portend affordability problem in 2021. In all, 58.3% of new and existing homes sold between the beginning of October and end of December were affordable to families earning an adjusted U.S. median income of $72,900. This is unchanged from the 58.3% of homes sold in Q3 of 2020 that were affordable to median-income earners and the lowest reading since Q4 of 2018. The HOI shows that the national median home price jumped to an all-time high of $320,000 in the Q4, overtaking the previous record-high of $313,000 set in Q3. Meanwhile, average mortgage rates fell by 20 basis points in Q4 to a record-low of 2.85%, down from the previous all-time low of 3.05% in Q3 of 2020.

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Housing Affordability Holds Steady; Challenges Loom