U.S. housing affordability ended the first quarter of 2016 with an improvement, the second straight gain on a quarterly basis, according to the Housing Opportunity Index (HOI) report released by the National Association of Home Builders (NAHB) and Wells Fargo Thursday morning.
“This is the second consecutive quarter that we’ve seen a nationwide improvement in affordability due to favorable home prices and mortgage rates,” said NAHB Chief Economist Robert Dietz in a statement. “These factors, along with rising employment, a growing economy and pent-up demand will provide a boost for home sales in the second half of 2016.”
In this quarter, 65% of all homes (including both new and existing) that sold on the market from January 2016 through the end of March were affordable to families making the median income-- about $65,700-- in the U.S. This is a 1.7-percentage point increase from the 63.3% posted in the last quarter of 2015, but is 1.5 percentage points lower than the 66.5% of the same quarter a year ago. It is common for home affordability to pick up in a first quarter, as national median price usually goes a notch lower before entering the Spring selling season.
Median home prices in the U.S. trended down to $223,000 from the previous quarter’s $226,000, but are still 6.2% higher than the $210,000 recorded in the first quarter of 2015. This is the 11th consecutive year in which the median home price declined in the first quarter of a new year.
Meanwhile, average mortgage interest rates continued to dip to a rate of 4.05%, the lowest in three quarters. After briefly picking up in Summer 2015, the mortgage rate has been trending down for two straight quarters, providing opportunity for potential home buyers.
“With interest rates near historic lows and attractive home prices, this is a great time to buy a home,” said NAHB Chairman Ed Brady, in a statement.
The NAHB quarterly Housing Opportunity Index release is a gauge of the share of affordable housing on the market for families earning the national median income. A total of 236 metropolitan areas were covered in the research for the first quarter of 2016.
Read the full release on National Association of Home Builders >>
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