US housing affordability was on an 18-month downturn in the second quarter due to lack of supply, according to the National Association of Home Builders.
And the COVID-19 crisis has made matters even worse, NAHB Chairman Chuck Fowke said.
"There was underbuilding before the pandemic hit, and the coronavirus outbreak has exacerbated the situation by disrupting existing supply chains," he said. "Builders are particularly concerned over surging lumber prices that are up nearly 70% since mid-April."
The NAHB/Wells Fargo Housing Opportunity Index (HOI) showed that around 59.6% of new and existing homes nationwide sold between the start of April and end of June were affordable to families earning an adjusted US median income of $72,900. This marked the lowest reading since Q4 2018 and was down from 61.3% of homes sold in the first quarter that were affordable to median-income earners.
Adjusted to the effects of the pandemic, the Department of Housing and Urban Development's national median family income estimate used in the HOI was 7.1% lower than the initial estimates of $78,500 for 2020.
National median home price rose to a record $300,000 in the second quarter from $280,000 in the previous quarter. Meanwhile, average mortgage rates were 27 basis points lower in the second quarter, down to 3.34% from 3.61% in the first quarter.
"Home prices appreciated robustly during the second quarter due to better-than-expected housing demand in the wake of the pandemic and because the coronavirus hindered the ability of builders to ramp up production," said NAHB Chief Economist Robert Dietz. "Looking forward, in this record-low interest rate environment housing should be a bright spot for the economy as rising demand continues in the suburbs, exurbs and other lower-density markets."
The metro dubbed the most affordable major housing market (with a population of at least 500,000) in the second quarter was Scranton-Wilkes Barre-Hazleton, Pa. There, 89.1% of all new and existing homes were sold at an affordable price to families earning the area's median income of $66,600.
Meanwhile, the least affordable major housing market was San Francisco-Redwood City-South San Francisco, Calif., with only 8.5% of homes affordable to families earning the area's median income of $129,200.