Steel Markets

NAHB: Housing Affordability Increasing, Builders Still Challenged

Written by Laura Miller


Housing affordability is on the rise in the US, but builders are facing challenges in providing affordable housing, the National Association of Home Builders (NAHB) reports.

In the first quarter of the year, 45.6% of new and existing home sales were affordable to American families earning the country’s median income of $96,300, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI). This was an increase from the lowest level seen since NAHB began tracking affordability – the 38.1% posted in Q4 last year.

Affordability is down, however, from Q1 last year when the HOI hit 56.9%. And it remains below the breakeven point of 50, NAHB noted.

06.09.23 NAHB HOI

“An uptick in housing affordability in the first quarter of 2023 corresponds to a rise in builder sentiment over the same period as well as an increase in single-family permits,” commented NAHB chairman Alicia Huey.

“And while buyer conditions improved at the beginning of the year, builders continue to wrestle with a host of affordability challenges. These include a shortage of distribution transformers and concrete that are delaying housing projects and raising construction costs, a lack of skilled workers, and tightening credit conditions,” she added.

The national median home price in Q1 declined by $5,000 from the prior quarter to $365,000, NAHB said. At the same time, average mortgage rates fell slightly from 6.8% to 6.46%, and the US median family income increased by 7%, or $6,300, to $96,300.

NAHB said the top five affordable major housing markets in Q1 were: Lansing-East Lansing, Mich.; Scranton-Wilkes-Barre, Pa.; Rochester, N.Y.; Toledo, Ohio; and Pittsburgh, Pa. The top five least affordable major housing markets were all located in California.

By Laura Miller, laura@steelmarketupdate.com

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