The National Association of Home Builders reported this week that rising mortgage rates, elevated construction costs and limited existing inventory helped push housing affordability in the US, in the third quarter of 2023, to its lowest level in more than a decade.

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), just 37.4% of new and existing homes sold between the beginning of July and end of September 2023 were affordable to families earning the US median income of $96,300. This is down from 40.5% posted in the second quarter of this year, and the lowest reading since NAHB began tracking affordability on a consistent basis in 2012.

“Steadily rising interest rates since the beginning of the year are taking a toll on housing affordability by raising housing costs for buyers and increasing the cost of development and construction loans for builders,” said NAHB chairman Alicia Huey. “And with mortgage rates currently near 8%, our builder surveys indicate that market conditions will remain challenging through the end of the year, even as the Federal Reserve appears to be done raising interest rates.”