Utah home buyers continue to face affordability challenges amid high housing demand and rising construction costs. That’s according to a new report from the National Association of Home Builders that says U.S. housing affordability fell to its lowest level in nearly a decade during the second quarter.
“Recent NAHB analysis shows that higher costs for lumber products have added nearly $30,000 to the price of an average new single-family home and raised the rental price of a new apartment unit by more than $90,” said NAHB Chief Economist Robert Dietz. “With the U.S. housing market more than 1 million homes short of what is needed to meet the nation’s demand, policymakers need to focus on supply-side solutions that will enable builders to increase housing production and rein in rising home prices.”
The Housing Opportunity Index showed that nationally 56.6% of new and existing homes sold between the beginning of April and the end of June were affordable to families earning the U.S. median income of $79,900. This is down sharply from 63.1% affordability during the first quarter. The Association says it is the lowest affordability since the beginning of the revised series in the first quarter of 2012.
The report also takes into account the effect of mortgage rates on affordability.
“Runaway construction cost growth, such as ongoing elevated prices for oriented strand board that has skyrocketed by nearly 500 percent since January 2020, continue to put upward pressure on home prices,” said NAHB Chairman Chuck Fowke. “Policymakers must address supply chain bottlenecks for building materials that are raising costs and harming housing affordability.”
The report says the national median home price rose to $350,000 in the second quarter, an increase of $30,000 from the first quarter. The Association says it’s the largest quarterly spike in the history of the series.
Across Utah, local areas also saw affordability challenges. Here’s a summary of the affordability data in each of Utah’s metro areas:
Salt Lake City
In Salt Lake City, 57.6% of homes sold in the second quarter were affordable to families making the median income of $92,900. That’s down from 65.7% last year at the same time. The median sales price was $450,000, the highest level recorded in the NAHB data going back to 2012.
Salt Lake ranks 154th for affordability nationally and 13th for affordability regionally.
Ogden-Clearfield
Ogden-Clearfield is historically one of the most affordable metro areas in Utah, according to the Housing Opportunity Index. This was also the case in the second quarter where 66.2% of homes sold were considered affordable to those making the median of $90,900. That’s down from 78.4% last year.
The median home price was $400,000, which is a record high. Ogden-Clearfield ranks 131st for affordability nationally and 7th regionally.
Provo-Orem
In the Provo-Orem metro, the second quarter median home price was $442,000. Affordability is lower in this metro, with only 48.3% of homes sold in the second quarter considered affordable to those making the median income of $83,700. That’s down from 63.8% last year.
Provo-Orem ranks 179th for affordability nationally and 26th regionally.
St. George
St. George was the least affordable metro in Utah, according to the report. Only 38.3% of homes sold in the second quarter were affordable to families making the median income of $69,600. That’s down from 59.7% last year. With a median home price of $414,000, St. George comes in at No. 202 for affordability nationally and 42nd regionally.
Logan
Second quarter 2021 data was not available for Logan in the most recent report.
To learn more about home prices and housing conditions in your own area, contact a local Realtor. A directory of Utah Realtors is available at UtahRealtors.com.