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)

 

Home Builder Sentiment Falls For 10th Month In A Row

The National Association of Home Builders (NAHB) released their NAHB/Wells Fargo Housing Market Index (HMI) report for October 2022 and, not surprisingly, it shows the builders are continuing to lose confidence in the market.  As our chart below shows, the Housing Market Index (HMI), the red line, peaked in November 2020 at 90 and has, with the exception of a few minor upticks along the way, fallen ever since reaching 38, the lowest level since August 2012 when it fell to 37.

Single Family Housing Starts and HMI Index 1985-2022 (NAHB)

Single Family Housing Starts and HMI Index 1985-2022 (NAHB)

First time home buyers bought almost half the homes sold last year

Almost Half Homes Sold Were To A First Time Home Buyer

First time home buyers dominate housing market in 2012

First time home buyers bought forty-six percent of the 6.8 million homes sold during the past two yearsaccording the National Association of Home Builders (NAHB). This is up significantly from 2005 and 2007 when only 35 percent of the homes sold were bought by a first time home buyer and is even higher than in 2009, the middle of the first time home buyer tax credit period, when first time buyers made up 41 percent of the market.

While the first time home buyer share of the market grows, the home builders languish with only 8 percent of the 6.8 million homes sold in the prior two years, or just over 500,000, being new homes. This is down dramatically, less than half in fact, from what it was even in 2009, another bad year for the new home industry however Continue reading “First time home buyers bought almost half the homes sold last year

84 Cities Listed As Improving Housing Markets in July

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According to the National Association of Home Builders/First American Improving Markets Index (IMI) that was just released, there are 84 cities in the U.S. where the housing markets are improving as of July, which is an increase from 80 cities the month before. The cities in the report are from 32 states, including 5 from Missouri; Kansas City, Jefferson City, Joplin, St. Joseph and Columbia.
This index looks at the progress the metro areas have made climbing out from the bottom of the market or, the “trough” in terms of the number of building permits issued, home prices and employment and, in order to make the list, the metro areas must show improvements in all 3 areas for six-consecutive months. Continue reading “84 Cities Listed As Improving Housing Markets in July

New reports paint bleak picture for housing market recovery

Dennis Norman St Louis Realtor - Housing Market - Housing RecoveryIt seems every time I start thinking it’s safe to use the “R” word (recovery) about the housing market, something happens to put the damper on it. The recent downgrading of the U.S. credit rating, which ultimately caused the Wall Street roller coaster ride, certainly hasn’t help. Then today, the National Association of Home Builders (NAHB) came out with a report saying “the recent economic news points to a slower housing recovery” and Fannie Mae, in their economic forecast released today saying “housing activity expected to weaken, despite recent declines in long-term interest rates”. Continue reading “New reports paint bleak picture for housing market recovery