Helped by record low mortgage rates, home affordability improved in the third quarter, according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Opportunity Index showed that 74.1 percent of homes sold in the third quarter were affordable to families earning the median income of $65,000. This was an improvement from the 73.8 percent of homes sold that were affordable to a median income family in the previous quarter.
"The median price of all new and existing homes sold in the third quarter was $189,000, which was up from $176,000 in last year's third quarter and the strongest number we’ve seen since the final three months of 2008," said NAHB chief economist David Crowe. "But at the same time, mortgage rates were at their lowest levels in decades, which kept homes quite affordable."
Mortgage rates have been low nearly all year, but they broke record lows a couple times in the third quarter. This trend has continued into the fourth quarter, as Freddie Mac reported both 15- and 30-year fixed-rate mortgages averaged new lows in the week ending November 15. This could help home affordability improve to end the year.