Job growth keeping mortgage interest rates at bay

by Anna Sobrevinas15 May 2017
After a dismal fourth quarter in 2016, housing affordability saw a slight improvement in Q1 2017 as wage growth and moderate home prices helped neutralize mortgage interest rates.

Data from the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) indicated that 60.3% of new and existing homes sold in Q1 2017 were affordable for families with a median income of $68,000, versus 59.9% of homes sold in the previous quarter.

“Ongoing job growth continues to fuel demand for housing, while wage growth is helping to offset the effects of rising mortgage rates and keep home prices affordable,” said NAHB Chief Economist Robert Dietz. “NAHB anticipates that housing will continue on a gradual upward path throughout the year.”

The national median home price also saw a decrease in the first quarter of the year, down to $245,000 from Q4 2016’s $250,000. However, average mortgage rates increased to 4.33% in Q1 2017 from 3.84% Q4 2016.

“Builders are reporting confidence and solid traffic in many markets across the nation even as they continue to grapple with nagging headwinds,” said NAHB Chairman Granger MacDonald. “Regulatory constraints, trade barriers on Canadian softwood lumber and persistent shortages of lots and labor are slowing the pace of the housing recovery.”

The San Francisco-San Mateo-Redwood City, Calif., area remained the least affordable market among large metros for the 18th consecutive quarter, as just 11.8% of homes sold in Q1 2017 were “wallet-friendly” to families with a median income of $108,400.

Neighboring Salinas, Calif., was the least affordable among small metros, as only 13.8% of all homes sold were affordable to families with a median income of $63,100.

Meanwhile, the Youngstown-Warren-Boardman, Ohio-Pa., area was the most affordable market for large metros for the second consecutive quarter, as 92.7% of all homes sold in Q1 2017 were affordable to families with a median income of $54,600. Kokomo, Ind., was the most affordable market for small metros, as 96.3% of new and existing homes sold were affordable to families with a median income of $62,500.


Related stories:
What’s holding back would-be home buyers?
Builders confident as new home mortgages rise
 

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