Builders’ Housing Affordability Index Drops To Lowest Level Since Inception

The National Association of Home Builders (NAHB) and Wells Fargo, jointly publish quarterly their Housing Opportunity Index (HOI) which shows the affordability, or lack thereof, of homes to a typical family.  To arrive at an index value the median home price of recently sold homes for an area is taken into account as well as the median income for a family in that area.  From this data the index is computed to show how affordable the typical home is to a typical family.  The higher the index, the more affordable homes are to buyers in that market and the lower the index the less affordable.

For the 3rd quarter of 2022, the HOI index hit the lowest level (meaning homes were less affordable) since the inception of the HOI in 2012.  As the chart below shows, the current Housing Opportunity Index for the U.S. is at 42.2% meaning just over 40% of families can afford to buy a home in their area. This is down slightly from 2nd quarter but down quite a bit from the first quarter of this year when it was 56.9%.

Affordability in St Louis is much better…

The NAHB/Wells Fargo Housing Opportunity Index is also produced for metro-areas.  For the third quarter of this year, St Louis had a HOI index of 74.8, over 30 points better than the national index!  This means a typical home in St Louis is affordable to about 30% more of St Louis families with a typical income than on the national level.

NAHB/Wells Fargo Housing Opportunity Index (HOI)

(click on chart for current, live, interactive chart)

NAHB/Wells Fargo Housing Opportunity Index (HOI)


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