Mirroring a steep rise in mortgage rates coupled with ongoing building material supply chain bottlenecks that increased construction costs, housing affordability posted three consecutive quarterly declines in 2022 and now stands at its lowest level since the NAHB began tracking it on a consistent basis in 2012. According to the NAHB/Wells Fargo Housing Opportunity Index, just 38.1% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $90,000. The index trails the previous mark of 42.2% in the third quarter and 42.8% set in the second quarter. However, a recent drop in mortgage rates over the past two months signals that declining affordability conditions may have reached their low point for this cycle.