NAHB Chairman Alicia Huey.
“Affordability conditions should show some gradual improvement this year, as mortgage rates peaked in the fourth quarter of 2023 and are now well below 7%,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Alabama. “But even as lower interest rates track with our latest builder surveys that indicate an upturn in builder confidence in the single-family market, affordability conditions will remain challenging as builders contend with a high-cost regulatory environment and a chronic shortage of workers and buildable lots.”
The HOI shows that the national median home price was $375,000 in the fourth quarter, down from $388,000 in the third quarter.
But the average mortgage rates increased more than 30 basis points from 7.13% in the third quarter up to 7.44% in the fourth quarter—the highest rate in the HOI series history.
“Even as overall inflation continues to moderate, shelter costs continue to put upward pressure on inflation, accounting for more than half the inflation gains in the latest Consumer Price Index,” said NAHB Chief Economist Robert Dietz. “The best way to tame shelter inflation and address America’s housing affordability challenges is to enact policies that reduce regulatory costs to help builders increase the supply of housing.”
The Most and Least Affordable Markets in the Fourth Quarter:
Lansing-East Lansing, Michigan, was the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. There, 79.3% of all new and existing homes sold in the fourth quarter were affordable to families earning the area’s median income of $97,800.
Top five affordable major housing markets:
1. Lansing-East Lansing, Mich.
2. Harrisburg-Carlisle, Pa.
3. Indianapolis-Carmel-Anderson, Ind.
4. Dayton-Kettering, Ohio
5. Akron, Ohio