Rising Home Prices Put a Dent in Housing Affordability
While housing bargains can still be found, home buyers are increasingly finding that home prices are on the rise in many markets. As such, housing affordability is being pushed lower, according to the second quarter Housing Opportunity Index by the National Association of Home Builders/Wells Fargo. Still, by historical standards, housing affordability remains high.
According to the latest index, 73.8 percent of all new and existing homes sold in the second quarter were affordable to families who earn the national median income of $65,000. A record high in housing affordability was reached in the first quarter, in which 77.5 percent of homes were affordable to median-income earners.
The index showed that 92 percent of the metros included in the index saw their median home prices rise in the second quarter compared to the first quarter.
"While interest rates and overall housing affordability remain very favorable on a historic basis, the decline in the latest HOI is a positive development because it is another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace," says NAHB Chairman Barry Rutenberg.
Most, Least Affordable Markets
Overall, the top five most affordable housing markets for the second quarter were:
- Youngstown-Warren-Boardsman, Ohio, Pa. (where 93.4% of the homes sold were affordable to the area’s median-income earners)
- Dayton, Ohio
- Buffalo-Niagara Falls, N.Y.
- Indianapolis-Carmel, Ind.
- Modesto, Calif.
On the other hand, the least affordable major housing markets in the second quarter were:
- New York- White Plains-Wayne, N.Y.-N.J. (29.4% of the homes sold there were affordable to the area’s median income family earners)
- San Francisco-San Mateo-Redwood City, Calif.
- Bridgeport-Stamford-Norwalk, Conn.
- Santa Ana-Anaheim-Irvine, Calif.
- Los Angeles-Long Beach-Glendale, Calif.