Strong wage growth more than offset an increase in mortgage interest rates to boost nationwide housing affordability in the first quarter of 2018, according to the NAHB Housing Opportunity Index (HOI).

In all, 61.6% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $71,900. This is up from the 59.6% in the fourth quarter of 2017.

In Greater Greenville, a slight drop in housing prices coupled with a $4,400 increase in annual wages resulted in an improvement to the index from 70.6% to 75.7% during the first quarter.  House prices dropped from $202,000 to $194,000 as builders responded to demand from millennials for housing that they can afford.  Greenville is the 107th most affordable housing market in the country, down from 98th last quarter as other markets even better improvements.

Charleston’s affordability also improved as wages rose by nearly 10 percent.  Charlotte also improved, along with Atlanta.  Columbia’s affordability fell slightly to 82.5%.  Columbia is among the 50 most affordable housing markets in the country and 10th in the Southeast.

“Continued job growth, rising wages and strong consumer confidence are fueling housing demand. In turn, this should lead to more buyers entering the housing market in the coming months,” said NAHB chairman Randy Noel. “However, builders continue to face chronic labor and lot shortages, rising prices for building materials and excessive regulations.”

“At the national level, median family income rose an impressive 5.7% to $71,900 in 2018 from $68,000 last year, and this wage growth helped to boost housing affordability,” said NAHB chief economist Robert Dietz. “A growing economy, along with tight inventories and increasing household formations, will lift housing production in the year ahead. But we also expect mortgage rates to continue to rise, and this will place downward pressure on affordability.”

Average mortgage rates jumped by nearly 30 basis points to 4.34% from 4.06% in the fourth quarter of 2017.

Of the 237 metropolitan areas recorded in the first quarter HOI, 167 markets registered a gain in affordability from the fourth quarter of 2017, 68 posted a loss and two were unchanged.

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