Affordability Remained High in Q3 as Rates Offset Prices

News

Even through housing prices gained ground in the third
quarter of 2014 the National Association of Home Builders (NAHB) said today
that affordability remained high.  An
estimated 61.8 percent of the homes that sold during the quarter were deemed “affordable”
by families earning the median income. 
In the third quarter that income on a national level was $63,900.

The affordability measure was only a slight dip from
the second quarter when the NAHB/Wells Fargo Housing Opportunity Index (HOE) was
at 62.6 percent.  Median home prices
increased
from $214,000 in the second quarter to $221,000 in the third but
mortgage interest rates eased from 4.44 percent to 4.35 percent over the same
time frame.

“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.”

Youngstown-Warren-Boardman, Ohio-Pennsylvania was the most affordable major
housing market
.  Just under 90 percent 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. Other major U.S. housing
markets at the top of the affordability chart in the third quarter included, in
descending order, Syracuse, Indianapolis, Harrisburg-Carlisle, and Dayton.

The most affordable smaller markets were Cumberland, Maryland and Kokomo,
Indiana, tied at 94.8 percent affordability. 
The median income was $54,100 in Cumberland and $56,900 in Kokomo.  Other affordable smaller markets were
Davenport, Iowa-Moline-Rock Island, Illinois; Mansfield, Ohio; and Springfield,
Ohio. 

The least affordable major housing market for the eighth straight quarter
was San Francisco-San Mateo-Redwood City where only 11.4 percent of homes sold
in the third quarter were affordable to families earning the area’s median
income of $100,400.  Also near the bottom
were three other California metro areas, Los Angeles-Long Beach-Glendale. Santa
Ana-Anaheim-Irvine, and  San
Jose-Sunnyvale-Santa Clara.  The New-York
area was the fifth least affordable major market.

All five least
affordable small housing markets were in California. At the very bottom was
Napa, where 10.2 percent of all new and existing homes sold were affordable to
families earning the
area’s median income of $70,300.  Other small markets included Santa
Cruz-Watsonville, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles.

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