US Housing Affordability Remains Near Record Low in 2023Q4

According to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), in 2023Q4 just 37.7% of all new and existing homes sold were affordable to families earning the US median income of $96,300. This is nearly identical to the 37.4% share in Q3, which was the lowest reading since the NAHB began tracking affordability on a consistent basis in 2012.

The HOI shows that the national median home price was $375,000 in Q4, down from $388,000 in Q3. Meanwhile, average mortgage rates increased more than 30 basis points from 7.13% in Q3 to 7.44% in Q4—the highest rate in the HOI series history.

According to the NAHB, the top five most affordable major housing markets in Q4 were as follows:

1. Lansing-East Lansing, Michigan
2. Harrisburg-Carlisle, Pennsylvania
3. Indianapolis-Carmel-Anderson, Indiana
4. Dayton-Kettering, Ohio
5. Akron, Ohio

Top five least affordable major housing markets—all located in California—were as follows:

1. Los Angeles-Long Beach-Glendale
2. Anaheim-Santa Ana-Irvine
3. San Diego-Chula Vista-Carlsbad
4. Oxnard-Thousand Oaks-Ventura
5. San Francisco-San Mateo-Redwood City

The NAHB also announced that Q4 marks the final report of the long-running HOI series. The HOI will be replaced in 2024Q1 by a new housing affordability index from NAHB called the Cost of Housing Index (CHI), a quarterly analysis of housing costs in the US and metropolitan areas. The CHI represents the share of a typical family’s income needed to make a mortgage payment. A low-income CHI will also be produced for families earning only 33% of the area’s median income.