WASHINGTON, D.C. – (RealEstateRama) — Spurred by a modest reduction in mortgage interest rates and favorable home prices, nationwide housing affordability in the first quarter of 2016 posted a slight increase, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.
“With interest rates near historic lows and attractive home prices, this is a great time to buy a home,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.
“This is the second consecutive quarter that we’ve seen a nationwide improvement in affordability due to favorable home prices and mortgage rates,” said NAHB Chief Economist Robert Dietz. “These factors, along with rising employment, a growing economy and pent-up demand will provide a boost for home sales in the second half of 2016.”
In all, 65 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,700. This is up from the 63.3 percent of homes sold that were affordable to median-income earners in the fourth quarter.
The national median home price fell from $226,000 in the fourth quarter to $223,000 in the first quarter. Meanwhile, average mortgage rates edged lower from 4.09 percent to 4.05 percent in the same period.
For the second consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation’s most affordable major housing market. There, 93.1 percent of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $53,900.
Rounding out the top five affordable major housing markets in respective order were Syracuse, N.Y.; Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes-Barre-Hazleton, Pa.; and Toledo, Ohio.
Meanwhile, Cumberland, Md.-W.Va., claimed the title of most affordable small housing market in the first quarter of 2016. There, 98 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $55,100.
Smaller markets joining Cumberland at the top of the list included Wheeling, W.Va.-Ohio; Fairbanks, Alaska; Binghamton, N.Y.; and Davenport-Moline-Rock Island, Iowa-Ill.
For the 14th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 10.4 percent of homes sold in the first quarter were affordable to families earning the area’s median income of $96,800.
Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.
Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, Calif., where 16.1 percent of all new and existing homes sold were affordable to families earning the area’s median income of $85,100.
Other small markets at the lowest end of the affordability scale included Salinas, Calif.; Napa, Calif; San Luis Obispo-Paso Robles-Arroyo Grande, Calif.; and Kahului-Wailuku-Lahaina, Hawaii.
Please visit nahb.org/hoi for tables, historic data and details.
Editor’s Note: The NAHB/Wells Fargo Housing Opportunity Index (HOI) is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Agency.
The NAHB/Wells Fargo HOI is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public