Housing affordability showed signs of easing in the first quarter, according to the National Association of Home Builders (NAHB).
The NAHB)/Wells Fargo Housing Opportunity Index (HOI) improved by 38.1% from the Q4 2022 reading, the lowest level since 2012, thanks to lower home prices and solid wage gains. HOI data showed that the national median home price declined to $365,000 in the first quarter from $370,000 in the previous quarter. Additionally, long-term mortgage rates averaged 6.46% in Q1, down from a series-high of 6.80% in Q4. The US median family income jumped 7% from $90,000 in 2022 to $96,300 in 2023.
The quarterly HOI increase brings the share of new and existing homes affordable to families earning the US median income of $96,300 to 45.6% of all homes sold in Q1. However, the index remained significantly lower compared to the first quarter 2022 reading of 56.9%, a reminder of ongoing building material supply chain issues and other affordability challenges.