Housing affordability is at its lowest level since the NAHB began tracking the metric in 2012. Affordability, which posted three consecutive quarterly declines in 2022, has been negatively impacted by rising mortgage rates, building material supply bottlenecks, and increased construction costs. According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 38.1% of new and existing homes sold between the beginning of October 2022 and the end of December 2022 were affordable for families earning the U.S. median income of $90,000. The top five least affordable major and small housing markets are all located in California, according to the NAHB.
While the HOI shows that the national median home price fell to $370,000 in the fourth quarter, it is still the third-highest median price in the history of the series, after the $380,000 price recorded in the third quarter and the all-time high of $390,000 in the second quarter. Meanwhile, average mortgage rates reached a series high of 6.80% in the fourth quarter, surpassing the previous record-high of 5.72% in the third quarter.
The top five most affordable major housing markets in the fourth quarter of 2022 were:
- Indianapolis-Carmel-Anderson, Indiana
- Rochester, New York
- Pittsburgh, Pennsylvania
- Toledo, Ohio
- Dayton-Kettering, Ohio
Top five least affordable major housing markets—all located in California:
- Los Angeles-Long Beach-Glendale
- Anaheim-Santa Ana-Irvine
- San Diego-Chula Vista-Carlsbad
- San Francisco-San Mateo-Redwood City
- San Jose-Sunnyvale-Santa Clara
Meanwhile, Bay City, Michigan was rated the nation’s most affordable small market, with 88.5% of homes sold in the fourth quarter being affordable to families earning the median income of $74,800.
