Housing affordability has now reached a 10-year low in the second quarter of 2018, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

“Tight inventory conditions and rising construction costs are factors that are holding back housing and putting upward pressure on home prices," NAHB Chairman Randy Noel said. “Meanwhile, tariffs on Canadian lumber imports into the U.S. are further eroding housing affordability.”

Homebuilders are struggling to ensure pricing does not outpace expected gains in wage growth, according to Noel.

In fact, only 57.1% of new and existing homes sold between the months of April and June were affordable to families earning the U.S. median income of $71,900.

This is the lowest reading since mid-2008 and is down from the 61.6% of homes sold in Q1 that were affordable to median-income earners, according to the report.

“Rising household formations, along with a strong economic expansion in the second quarter that has fueled job growth, will support housing demand in the second half of 2018,” NAHB Chief Economist Robert Dietz said. “However, growing trade war concerns and the expectation of higher mortgage rates are additional headwinds negatively affecting housing affordability.”

In Q2 of 2018 the national median home price jumped from $252,000 to $265,000, which is the highest quarterly median price in the history of the HOI series. Average mortgage rates also jumped more than 30 basis points from 4.34% in Q1 to 4.67% in Q2.

Notably, New York was home to the nation's most affordable major and smaller markets. 

In Syracuse, New York, 89.1% of all new and existing homes sold in Q2 were affordable to families earning the area's median income of $74,10. In Elmira, New York, 97% of homes sold in Q2 were affordable to families earning the median income of $71,000.

Not surprisingly, California was home to the nation's least unaffordable markets, including Los Angeles, Long Beach, Glendale, Anaheim-Santa Ana-Irvine, San Jose-Sunnyvale-Santa Clara and San Diego-Carlsbad.

Specifically, San Francisco was the nation's least affordable major market for the third consecutive quarter. In this city, only 5.5% of homes sold in Q2 of 2018 were affordable to families earning the area's median income of $119,600.

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