Housing Affordability Posts 2nd Straight Gain

Filed in Economics, Home Building by on May 12, 2016 1 Comment
Nassau Bay in Orlando was recognized as the Best Acquisition/Rehabilitation of an Affordable Apartment Community in the NAHB Pillars of the Indsutry Awards.

Nassau Bay in Orlando was recognized as “Best Acquisition/Rehabilitation of an Affordable Apartment Community” in the NAHB Pillars of the Industry Awards.

Spurred by a modest reduction in mortgage interest rates and favorable home prices, nationwide housing affordability in the first quarter of 2016 posted a slight increase, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released today.

“With interest rates near historic lows and attractive home prices, this is a great time to buy a home,” said NAHB Chairman Ed Brady.

“This is the second consecutive quarter that we’ve seen a nationwide improvement in affordability due to favorable home prices and mortgage rates,” said NAHB Chief Economist Robert Dietz. “These factors, along with rising employment, a growing economy and pent-up demand, will provide a boost for home sales in the second half of 2016.”

Sixty-five percent of homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,700. This is up from the 63.3% of homes sold that were affordable to median-income earners in the fourth quarter of 2015.

The national median home price fell from $226,000 in the fourth quarter to $223,000 in the first quarter. Meanwhile, average mortgage rates edged lower from 4.09% to 4.05%.

For the second consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa. was rated the nation’s most affordable major housing market. There, 93.1% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $53,900.

Rounding out the top five affordable major housing markets were Syracuse, N.Y.; Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes-Barre-Hazleton, Pa.; and Toledo, Ohio.

Meanwhile, Cumberland, Md.-W.Va. claimed the title of most affordable small housing market: 98% of homes sold during the first quarter were affordable to families earning the area’s median income of $55,100.

Smaller markets at the top of the list included Wheeling, W.Va.-Ohio; Fairbanks, Alaska; Binghamton, N.Y.; and Davenport-Moline-Rock Island, Iowa-Ill.

For the 14th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif. was the nation’s least affordable major housing market. There, just 10.4% of homes sold were affordable to families earning the area’s median income of $96,800.

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.

Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, Calif., where 16.1% of all homes sold were affordable to families earning the area’s median income of $85,100.

Other small markets at the lowest end of the affordability scale included Salinas, Calif.; Napa, Calif; San Luis Obispo-Paso Robles-Arroyo Grande, Calif.; and Kahului-Wailuku-Lahaina, Hawaii.

Please visit nahb.org/hoi for tables, historic data and details.

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