NAHB: Housing Affordability Rises in First Quarter

May 14th, 2015 by Editor

Lower interest rates and falling home prices boosted housing affordability in the first quarter of 2015, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today.

In all, 66.5 percent of new and existing homes sold between the first of January and end of March were affordable to families earning the U.S. household median income of $65,800. That’s up from the 62.8 percent of homes sold that were affordable to median-income earners in the fourth quarter of 2014.

The national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, the average mortgage interest rate fell from 4.29 percent to 4.03 percent in the same period.

“Consumers benefitted from continued low mortgage rates and some fall in the price of homes sold in the first quarter, as these conditions offer a great time to buy,” said NAHB chairperson Tom Woods, a home builder from Blue Springs, Mo.

“The past two quarters have seen an improvement in affordability as mortgage rates remain low,” said NAHB chief economist David Crowe. “Eighty-five percent of the metropolitan areas measured experienced an increase in affordability. Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace.”

For the second straight quarter, Syracuse, N.Y., remained the nation’s most affordable major housing market, as 95.6 percent of all new and existing homes sold in the first quarter of 2015 were affordable to families earning the area’s median income of $68,500.

Also ranking among the most affordable major housing markets were Toledo, Ohio; St. Louis; Akron, Ohio; and Harrisburg-Carlisle, Pa.

Meanwhile, Sandusky, Ohio, topped the affordability chart among smaller markets in the first quarter of 2015. There, 96.3 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $69,600. Other smaller housing markets at the top of the index included Cumberland, Md.-W.Va.; Elmira, N.Y.; Davenport-Moline-Rock Island, Iowa-Ill.; and Kokomo, Ind.

San Francisco-San Mateo-Redwood City, Calif. was the nation’s least affordable major housing market for the 10th quarter in a row. Just 14.1 percent of homes sold there in the first quarter were affordable to families earning the area’s median income of $103,400.

Other major metros at the bottom of the affordability chart were Los Angeles-Long Beach-Glendale, Calif.; Santa Ana-Anaheim-Irvine, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara, Calif.

All five least affordable small housing markets were in California. At the very bottom was Santa Cruz-Watsonville, where 21.6 percent of all new and existing homes sold were affordable to families earning the area’s median income of $87,000. Other small markets included Salinas, Napa, San Luis Obispo-Paso Robles, and Santa Barbara-Santa Maria-Goleta; in descending order.

 

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