According to the recent report issued by the National Association of Home Builders, home affordability. is still a major obstacle to home ownership, with inflation, high mortgage rates and inventory shortages keeping buyers at bay.
Despite the slowing of the national inflation rate, and some price retreats, households are fighting a never-ending battle to catch up to the trajectory of the market.
The NAHB points to high construction costs and obstructive building regulations, all of which create an obstacle course to navigate U.S. housing affordability, which is at a 10-year low.
According to the recent report, during the fourth quarter of 2023 only 37.7% of new and existing homes sold during the final three months of 2023 were considered affordable to US households earning the US median income of $96,300.
These figures don’t exactly reflect the numbers published by the US Fed. The median household income in 2018 was $63,180, in 2019 it was $68,700, in 2020 it was $68,010, and in 2022 it was $74,500.
According to the US Census Bureau, there are some significant differences in numbers reported. The US Census Bureau reports that the real median household income in 2022 was $74,580, representing a 2.3% decline from 2021, which was $76,330.
Another interesting fact put out by the US Census Bureau was that in 2022, 65.6% of working women worked full time, year-round. This represents the largest share on record.
Still. rates for the 30-year fixed mortgage are still in the mid 6% range giving potential buyers some relief from the 7-8% rates that had been reported earlier in the year. But unfortunately, the high regulatory costs and the chronic shortage of workers and of buildable lots is not allowing home builders to keep up with demand. As reported by the NAHB, the Midwest represents the most affordable major market. It was followed by Harrisburg, Pennsylvania; Indianapolis, Indiana and the Ohio markets of Dayton and Akron.
As expected, Los Angeles was designated the least affordable major market in the United States for the 11th consecutive quarter period, where only 2.7% of homes sold in LA in the fourth quarter of 2023 were considered to be affordable.