The National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released this week shows that low interest rates were not enough to counter the double whammy of a supply shortage and rising home prices, which together contributed to a decline in housing affordability in the second quarter of 2020.

In all, 59.6% of new and existing homes sold between the beginning of April and end of June were affordable to families earning an adjusted U.S. median income of $72,900. It’s the lowest reading since the fourth quarter of 2018 and is down from the 61.3% of homes sold in the first quarter of the year that were affordable to median-income earners.

The Department of Housing and Urban Development’s (HUD) original estimates of median family income for 2020 were developed prior to the COVID-19 pandemic. To account for the pandemic’s effects, the HUD estimates were reduced consistent with NAHB’s economic forecast for 2020, resulting in the 2020 national median income estimates used in the HOI calculations ($72,900) being 7.1% lower than the initial national 2020 estimates ($78,500) from HUD.

“There was underbuilding before the pandemic hit, and the coronavirus outbreak has exacerbated the situation by disrupting existing supply chains,” said NAHB chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Builders are particularly concerned over surging lumber prices that are up nearly 70% since mid-April.”

The HOI shows that the national median home price jumped to a record of $300,000 in the second quarter, up from $280,000 in the previous quarter. Meanwhile, average mortgage rates fell by 27 basis points from 3.61% in the first quarter to 3.34% in the second quarter.

“Home prices appreciated robustly during the second quarter due to better-than-expected housing demand in the wake of the pandemic and because the coronavirus hindered the ability of builders to ramp up production,” said NAHB chief economist Robert Dietz. “Looking forward, in this record-low interest rate environment housing should be a bright spot for the economy as rising demand continues in the suburbs, exurbs and other lower density markets.”

Scranton-Wilkes Barre-Hazleton, Pa., was rated the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. There, 89.1% of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $66,600. Meanwhile, Cumberland-Md.-W.Va., was rated the nation’s most affordable smaller market, with 96.9% of homes sold in the second quarter being affordable to families earning the median income of $57,500.

Rounding out the top five affordable major housing markets in respective order were Harrisburg-Carlisle, Pa.; Pittsburgh, Pa.; St. Louis-Mo.-Ill.; and Wilmington, Del.-Md.-N.J.

Smaller markets joining Cumberland at the top of the list included Binghamton, N.Y.; Kokomo, Ind.; Lima, Ohio; and Davenport-Moline-Rock Island, Iowa-Ill.

San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 8.5% of the homes sold during the second quarter were affordable to families earning the area’s median income of $129,200.

Other major metros at the bottom of the affordability chart were in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.

All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 16.1% of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $75,800.

In descending order, other small markets at the lowest end of the affordability scale included Merced; San Rafael; Santa Cruz-Watsonville; and San Luis Obispo-Paso Robles-Arroyo Grande.