The percentage of potential home buyers who perceive
housing in their market as affordable increased in the third quarter, at least
as reported in a recent National Association of Home Builders (NAHB) survey. NAHB’s
Housing Trends Report says that 27 percent of buyers responding to the
survey reported they could afford at least half of the homes available for sale in their markets. This is
up from 20 percent in the third quarter of last year.
Quint writes in NAHB’s Eye on Housing blog that the increased responses
indicate that lower mortgage rates have had a stronger impact on some buyers’
perceptions of affordability than has rising home prices. “Nonetheless, it is important to keep in mind that most home
buyers (72 percent) still say they can afford only a minority of the homes
available in their markets,” she says.
A graph of survey responses provided
by NAHB shows that buyers have been quite consistent about this matter over the
last few years. Since the fourth quarter of 2017 the share of respondents who
felt they could afford half of the homes in their market has varied over only a
9-point range, from 18 percent to the current 27 percent high.
Between the third quarters of 2019
and 2020, the share of buyers who can afford half or more of the homes
available rose most significantly among Millennials (17 percent to 31percent)
but dropped among Boomers (23 percent to 19 percent).
Perceptions of affordability rose in
three of the four regions. The most significant increase was in the Northeast.