Housing affordability deteriorated in 2022 by the most since the housing crisis and rebalancing is needed to foment healthier market dynamics. But supportive structural factors mean a major correction in house prices is unlikely, according to Oxford Economics.
Its U.S. national Housing Affordability Index (HAI) rose 10 basis points quarter-over-quarter to 118 basis points in fourth quarter from 108 basis points in third quarter, reaching a new historic high and meaning that prices were 18 percent above the borrowing capacity of median income households. Oxford Economics indices for the Miami (up 14 basis points ) and New York City (up 12 basis points ) metros recorded the largest increases. Meanwhile, affordability improved in areas where it deteriorated the most during the pandemic, such as Boise (down 4 basis points ).
But the firm expects affordability to improve somewhat in the next two years as lower house prices and mortgage rates outweigh the impact of the lower