US Housing Affordability is Decent, Just Not in California

The affordability of homeownership dipped modestly in thernsecond quarter according to the National Association of Home Builders/WellsrnFargo Housing Opportunity Index (HOI).  Thernindex edged down by 3.3 percentage points from the first quarter to 63.2.</p

The HOI is based on the percentage of homes sold during thernrelevant period that are affordable to median-income earners.  The current reading indicates that betweenrnthe beginning of April and the end of June 63.2 percent of new and existingrnhomes that sold could be considered affordable.</p

The national median home price rose from $210,000 in thernfirst quarter to $230,000 in the second while mortgage rates edged down fromrn4.03 percent to 3.99 percent.  The U.S.rnmedian income was $65,800.</p

“Though affordability edged slightly lower in the second quarter, the HOI remainsrnwell above 50, where half the households can afford half the homes sold,” saidrnNAHB Chief Economist David Crowe. “Low mortgage rates, pent-up demand andrncontinued job growth should contribute to a gradual, steady rise in housingrnthroughout the year.” </p

The Youngstown, Ohio metropolitan statistical area (MSA) was rated thernnation’s most affordable major housing market. rnThere, 90.6 percent of homes were considered affordable to familiesrnearning the area’s median income of $53,700. rnSyracuse slipped to second place followed by Indianapolis, Scranton-Wilkes-Barre,rnand Cincinnati.  </p

Kokomo (Indiana) topped the list of most affordable smaller housing markets withrna 95.5 reading. The median income there is $55,200.  Kokomo was followed by Davenport-Moline, Lima,rnOhio; Elmira, and Cumberland, Maryland.  </p

The San Francisco-San Mateo-Redwood City MSA should be retired to the Hallrnof Fame after marking its 11^th consecutive quarter as the nation’srnleast affordable major housing market. Only 11 percent of homes sold there inrnthe second quarter were affordable to families earning the area’s median incomernof $103,400. </p

Other major metros at the bottom of the affordability chart included LosrnAngeles, Santa Ana-Anaheim-Irvine, San Jose, and New York City.  </p

All five least affordable small housing markets were in California. At thernvery bottom of the affordability chart was Santa Cruz-Watsonville, where just 18.2rnpercent of all new and existing homes sold were affordable to families earningrnthe area’s median income of $87,000. Other small markets at the lowest end ofrnthe affordability scale included Napa, Salinas, San Luis Obispo, and SantarnBarbara, respectively. </p

“Home price appreciation in many markets across the nation are a sign thatrnthe housing recovery continues to move forward,” said NAHB Chairman Tom Woods. “Atrnthe same time, the cost of building a home is rising due to higher costs forrnbuildable lots and skilled labor.”

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