The Week Ahead: Checking in on Home Affordability

On Thursday, August 9, 2018, the National Association of Home Builders (NAHB) will release its Housing Opportunity Index (HOI) survey for the second quarter.

The survey looks at the housing opportunity for a given area and is defined as the share of homes sold in that area that would have been affordable to a family earning the local median income based on standard mortgage underwriting criteria. Therefore, the HOI measures the share of records in a metropolitan area for which the monthly income available for housing is at or above the monthly cost for that unit.

For the first quarter, NAHB said that rising income gave a boost to housing affordability. In all, 61.6 percent of new and existing homes sold between the beginning of January and end of March 2018 were affordable to families earning a U.S. median income of $71,900. This was up from the 59.6 percent of homes sold that were affordable to median-income earners in the fourth quarter.

“At the national level, median family income rose an impressive 5.7 percent to $71,900 in 2018 from $68,000 last year, and this wage growth helped to boost housing affordability,” said NAHB Chief Economist Robert Dietz. “A growing economy, along with tight inventories and increasing household formations, will lift housing production in the year ahead. But we also expect mortgage rates to continue to rise, and this will place downward pressure on affordability.” Average mortgage rates jumped by nearly 30 basis points in the first quarter to 4.34 percent from 4.06 percent in the fourth quarter of 2017.

Here's what else is happening in The Week Ahead:

• MBA Mortgage Apps, Wednesday, 7 a.m. ET
• Stern & Eisenberg Webinar, Wednesday, 3 p.m. ET
• Freddie Mac, Primary Mortgage Market Survey, Thursday, 8 a.m. ET
• Fed Balance Sheet, Thursday, 4:30 p.m. ET
• Treasury Budget, Friday, 2 p.m. ET