Housing’s ‘Perfect Storm’ Puts Homeownership out of Reach for Some

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It would only make sense that with rising prices along with higher interest rates that more homes would be classified as unaffordable. For a more detailed look at this subject – please read the article below.

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Steady gains in home prices and rising mortgage rates across the United States contributed to weakening housing affordability in the year’s third quarter.

According to the Housing Opportunity Index (HOI) published by the National Association of Home Builders (NAHB) and Wells Fargo, 64.5 percent of new and existing homes from the start of July through the end of September were considered affordable to families earning the national median income of $64,400. That share is down from 69.3 percent in the second quarter, marking the biggest HOI decline since Q2 2004.

NAHB chairman Rick Judson said the third quarter’s drop was the result of a “‘perfect storm’ scenario.”

“With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor,” Judson said.

David Crowe, chief economist for NAHB, added that the decline may have been amplified by the current lending environment.

“Some of the decline in the affordability index could be the result of a loss in some more modest priced homes as tight underwriting standards have limited the purchases by moderate income families,” he said. “While affordability has come down from the peak in early 2012, the index still means a family earning a median income can afford 65 percent of homes recently sold.”

To read the complete article – please use the link below.

Homeownership out of Reach

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