Housing Affordability Stays Strong, But Hinges On Low Rates

Housing affordability declined slightly in the firstrnquarter of this year, but remains near historic highs according to the NationalrnAssociation of Home Builders/Wells Fargo Housing Opportunity Index (HOI),rnreleased on Tuesday. </p

The Index looks at the percentage of homes sold in arnlocal area that are affordable to families earning the median income in thatrnarea during the quarter.  The measurernincorporates sales prices of both new and existing homes and the currentrninterest rates on fixed and adjustable rate loans.</p

On a national basis 73.7 percent of homes soldrnduring the quarter (median, $184,000) were affordable to families earning thernnational median income of $64,400.  Inrnthe fourth quarter of 2012 74.9 percent of homes met the affordabilityrncriteria.<br /<br /"Thanks to very favorable mortgage rates and prices, housing affordabilityrnhas remained quite high over the past four years,” observed NAHB ChairmanrnRick Judson.  “The HOI has notrnslipped below 70 since the end of 2008. That said, from a builder’srnperspective, it should be noted that rising costs for building materials, lotsrnand labor are making it somewhat more expensive to construct new homes inrntoday’s market.”</p

The most affordable market in the country was Ogden-Clearfield,rnUtah where 93.4 percent of homes sold during the first quarter were deemedrnaffordable.  This was the third consecutivernquarter that this area, north of Salt Lake City, topped the list, although itsrnaffordability slipped slightly from 93.7 in the fourth quarter.  The median house price was $210,000 and thernmedian income in the area is $70,800<br /
<strongOther major U.S. housing markets at the top of the affordability chart in thernfirst quarter included Indianapolis, and Lakeland-Winter Haven, Florida. Thernmost affordable small housing market was Mansfield, Ohio at 97.5, followed byrnCumberland, Maryland, and Fairbanks, Alaska.</p

At the other end of the spectrum, the San Franciscornmetro area was the least affordable major market with only 28.9 percent of homesrnsold being affordable to families earning the area’s median income of 102,000. Thernmedian house price in the area was $675,000.  Next were the New York City metro area and SantarnAna, California.  Two other Californiarncities, Los Angeles, and San Jose were also among the top five least affordable.rn</p<pThe least affordablernsmall housing market in the first quarter was Santa Cruz-Watsonville, Calif.,rnwhere 37.1 percent of all new and existing homes sold were affordable to thosernearning the area's median family income of $73,800. Two other small California marketsrnwere second and third, Salinas, and the San Luis Obispo area. <br /<br /"HOI results for the beginning of 2013 are little changed from what theyrnwere at the end of 2012, with Ogden-Clearfield Utah holding onto the title ofrnthe nation’s most affordable major housing market and San Francisco-San Mateo-RedwoodrnCity, Calif. retaining its position as the least affordable major market,”rnnoted NAHB Chief Economist David Crowe. “The bottom line is that, forrnconsumers who can qualify for a mortgage at today’s attractive rates, thernmajority of homes being sold remain within their grasp in marketsrnnationwide.”

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