Housing Affordability Slightly Lower in 3rd Quarter

Filed in Economics by on November 13, 2014 0 Comments

HOI-PPT-Q314[1]Firming home prices in markets across the country contributed to a slight dip in nationwide housing affordability in the third quarter of 2014, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI), released today.

In all, 61.8% of new and existing homes sold between the beginning of July and the end of September were affordable to families earning the U.S. median income of $63,900. This is down from the 62.6% in the second quarter.

The national median home price increased from $214,000 in the second quarter to $221,000 in the third. Meanwhile, average mortgage interest rates decreased from 4.44% to 4.35%.

“Low mortgage rates, strong job growth and affordable home prices make this a good time to buy a home,” said NAHB Chairman Kevin Kelly.

Youngstown-Warren-Boardman, Ohio-Pa. claimed the title of the nation’s most affordable major housing market, as 89.1% of all new and existing homes sold in this year’s third quarter were affordable to families earning the area’s median income of $52,700.

Meanwhile, Cumberland, Md.-W.Va. and Kokomo, Ind. each tied as the most affordable smaller market, with 94.8% of homes sold in the third quarter being affordable to those earning the median income of $54,100 in Cumberland and $56,900 in Kokomo.

Other major U.S. housing markets at the top of the affordability chart in the third quarter included Syracuse, N.Y.; Indianapolis-Carmel, Ind.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio; in descending order.

“Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards,” said NAHB Chief Economist David Crowe. “Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year.”

Meanwhile, smaller markets joining Cumberland and Kokomo at the top of the affordability chart included Davenport-Moline-Rock Island, Iowa-Ill.; Mansfield, Ohio; and Springfield, Ohio; in descending order.

For an eighth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. was the nation’s least affordable major housing market. There, just 11.4% of homes sold in the third quarter were affordable to families earning the area’s median income of $100,400. At the very bottom was Napa, where 10.2% of all new and existing homes sold were affordable to families earning the area’s median income of $70,300.

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

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