Home Prices on the Rise, Affordability Slightly Lower in Third Quarter

November 14th, 2014 by Editor

Firming home prices contributed to a slight dip in nationwide housing affordability in the third quarter, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 61.8 percent 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 percent of homes sold that were affordable to median-income earners in the second quarter.

The national median home price increased by $5,000 to a total of $221,000 in the third quarter. Meanwhile, average mortgage interest rates decreased from 4.44 percent to 4.35 percent in the same period.

“Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards,” says 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.”

According to the report, Youngstown-Warren-Boardman, Ohio-Pa. is the nation’s most affordable major housing market, as 89.1 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 Syracuse, N.Y., Indianapolis-Carmel, Ind., Harrisburg-Carlisle, Pa., and Dayton, Ohio, in descending order.

Meanwhile, Cumberland, Md.-W.Va. and Kokomo, Ind., each tied as the most affordable smaller market, with 94.8 percent 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.

Joining Cumberland and Kokomo at the top of the affordability chart included Davenport-Moline-Rock Island, Iowa-Ill., and Mansfield 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 percent of homes sold in the third quarter were affordable to families earning the area’s median income of $100,400.

Tags: , ,

Leave Comment