Builder confidence in the market for newly-built single-family homes edged one point lower to 70 in November, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. The past two months mark the highest sentiment levels in 2019.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”

“We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” said NAHB Chief Economist Robert Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions fell two points to 76 and the measure charting traffic of prospective buyers dropped one point to 53. The component measuring sales expectations in the next six months rose one point to 77.

Looking at the three-month moving averages for regional HMI scores, the Northeast posted a two-point gain to 62, the West was up three points to 81 and the South moved one point higher to 74. The Midwest remained unchanged at 58.

Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released today.

In all, 63.6 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $75,500. This is up from the 60.9 percent of homes sold in the second quarter of 2019 that were affordable to median-income earners and slightly higher than a first quarter 2019 reading of 62.6.

The national median home price remained steady at $280,000 in the third quarter, flat from the previous quarter, but a jump from the first quarter when the median price was $260,000. At the same time, average mortgage rates fell from 4.07 percent in the second quarter to 3.73 percent in the third quarter, reaching a three-year low.

“With mortgage rates at historic lows, consumers are experiencing greater buying power and increased affordability,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “Despite this positive development, builders still struggle with rising construction costs due to labor shortages and excessive regulations, which will continue to make housing affordability a major challenge.”

“While the Federal Reserve’s monetary policy has helped offset some of the rising construction costs, these headwinds are still affecting builders’ ability to increase inventory, particularly for entry-level buyers,” said NAHB Chief Economist Robert Dietz. “These higher production costs and other factors have caused a major decline in housing affordability over the past few years, and we expect that to remain a concern going forward.”

In the third quarter, Scranton-Wilkes-Barre-Hazleton, Pa., was the nation’s most affordable major housing market. There, 89.3 percent of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $67,000. Meanwhile, Monroe, Mich., was rated the nation’s most affordable smaller market, with 95.3 percent of homes sold in the third quarter being affordable to families earning the median income of $79,000.

Rounding out the top five affordable major housing markets in respective order were Indianapolis-Carmel-Anderson, Ind.; Youngstown-Warren-Boardman, Ohio-Pa.; Syracuse, N.Y.; and Harrisburg-Carlisle, Pa.

Smaller markets joining Monroe, Mich., at the top of the list included Cumberland, Md.-W. Va.; Davenport-Moline-Rock Island, Iowa-Ill.; Kokomo, Ind.; and Elizabethtown-Fort Knox, Ky.

San Francisco again ranked as the nation’s least affordable major market. There, just 8.4 percent of the homes sold in the third quarter of 2019 were affordable to families earning the area’s median income of $133,800.

Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.

All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 13.4 percent of all new and existing homes sold were affordable to families earning the area’s median income of $74,100.

In descending order, other small markets at the lowest end of the affordability scale included Santa Cruz-Watsonville; San Luis Obispo-Paso Robles-Arroyo Grande; Napa; and Santa Rosa.

Please visit www.nahb.org/hoi for tables, historic data and details.

Editor’s Note: The NAHB/Wells Fargo Housing Opportunity Index (HOI) is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. This release incorporates the use of Freddie Mac’s 30-year fixed effective interest rates series, following the discontinuation in mid-2019 of the FHFA series previously used in HOI calculations. National and metropolitan area HOI numbers were revised back to the first quarter of 2012 using Freddie Mac’s interest rate series.

The National Association of Home Builders (NAHB) announced the finalists for its 2020 Best of 55+ Housing Awards, the premier design and marketing competition for the 55+ housing industry. A total of 107 entries were chosen as finalists and are eligible for either a gold or silver award from NAHB’s 55+ Housing Industry Council.

“The Best of 55+ Housing Awards honor builders and developers who create homes and communities that suit the specific needs of the mature buyer and renter,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “Many of the communities featured well-executed amenities that focus on engagement and enrichment, and homes with creative floor plans with natural light throughout.”

Finalists were selected from entries in 42 categories representing single-family homes, rental housing, service-enriched housing, lifestyle features that 55+ buyers look for and marketing activity, plus three categories representing individuals and firms.

NAHB’s 55+ Housing Council launched the Best of 55+ Housing Awards to encourage quality and innovation in the 55+ housing market. The council provides information, education and networking opportunities for its members and provides advocacy support to NAHB on key 55+ housing issues. The awards program is sponsored by Aprilaire, BSB Design, Builders Design, Gilbert & Sheppard, KTGY Architecture + Planning, Mary DeWalt Design Group and PCR.

For more information on the awards program and a complete list of this year’s finalists, please visit www.nahb.org/55plusawards. Winners will be announced on Jan. 21, 2020, during the NAHB International Builders’ Show in Las Vegas.