Rising Prices Affect Housing Affordability in 2nd Quarter

Filed in Economics, Homeownership by on August 11, 2016 1 Comment

house with keysSolid home price appreciation more than offset a modest reduction in mortgage interest rates to push housing affordability lower in the second quarter of 2016, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released today.

In all, 62% of new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $65,700. This is down from the 65%  in the first quarter.

“Firm job growth, historically low interest rates and healthy price appreciation in many markets are all positive signs that the housing recovery continues to move forward,” said NAHB Chairman Ed Brady. “At the same time, regulatory hurdles and rising costs for buildable lots and skilled labor continue to put upward pressure on the cost of building a home.”

“Though we have seen a modest drop in affordability in the second quarter, the HOI is still fairly high by historical standards,” said NAHB Chief Economist Robert Dietz. “Rising employment, favorable mortgage rates and increasing household formations will keep the housing market on a gradual, upward path during the rest of the year.”

The national median home price increased from $223,000 in the first quarter to $240,000 in the second. Meanwhile, average mortgage rates edged lower from 4.05% to 3.88% in the same period.

For the third consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa. was rated the nation’s most affordable major housing market. There, 91.1% of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $53,900.

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

Meanwhile, Kokomo, Ind. claimed the title of most affordable small housing market in the second quarter. There, 98.2% of homes sold were affordable to families earning the area’s median income of $60,900.

Smaller markets at the top of the list included Cumberland, Md.-W.Va.; Fairbanks, Alaska; Davenport-Moline-Rock Island, Iowa-Ill.; and Monroe, Mich.

For the 15th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif. was the nation’s least affordable major housing market. There, just 8.5% of homes sold were affordable to families earning the area’s median income of $104,700.

At the bottom of the affordability chart were five major markets and five small housing markets — all in California. At the top: Los Angeles-Long Beach-Glendale, Anaheim-Santa Ana-Irvine, San Jose-Sunnyvale-Santa Clara and San Rafael.

The five least affordable small housing markets: Santa Cruz-Watsonville, where 14.7% of all new and existing homes sold were affordable to families earning the area’s median income of $85,100. Also at the bottom: Salinas; Napa; San Luis Obispo-Paso Robles-Arroyo Grande; and Santa Maria-Santa Barbara.

Learn more at nahb.org/hoi.

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  1. NAHB, state and local associations long with the membership should create buy now campaigns!
    Rates will never be this low in the forseeable future!
    Encourage your prospects to buy!
    Help your prospects improve their credit rating and clean up their debt so they can become buyers of the homes they want.
    Have your on site sales team members work together with their mortgage loan officers to help prospects become buyers.
    Initiate a referral program for your prospects and buyers!
    ONwards and UPwards!

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