WASHINGTON, DC — Soaring building material costs, high demand and low inventory have added tens of thousands of dollars to the price of a new home, causing housing affordability to fall to its lowest level in nearly a decade during the second quarter of 2021, the National Association of Home Builders reported.
According to the NAHB/Wells Fargo Housing Opportunity Index, released in August, 56.6% of new and existing homes that sold between the beginning of April and the end of June were affordable to families earning the U.S. median income of $79,900. This is down sharply from the 63.1% of homes sold in the first quarter of 2021, and the lowest affordability level since the first quarter of 2012, the NAHB said.
NAHB analysis reveals that higher costs for lumber products have added nearly $30,000 to the price of an average new single-family home, observed Robert Dietz, chief economist for the Washington, DC-based trade association, who reported that the national median home price surged to a record $350,000 in the second quarter, up $30,000 from the first quarter, the largest quarterly price hike in the history of the series.
“With the U.S. housing market more than 1 million homes short of what is needed to meet the nation’s demand, policymakers need to focus on supply-side solutions that will enable builders to increase housing production and rein in rising home prices,” Dietz said.
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