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As More Markets Stabilize, Housing Affordability Nears Record Levels for 10th Consecutive Quarter

WASHINGTON, D.C. – November 17, 2011 – (RealEstateRama) — Buoyed by stabilizing home prices and sustained low interest rates, nationwide housing affordability during the third quarter of 2011 hovered near its highest level in the more than 20 years it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.

The HOI indicated that a near-record 72.9 percent of all new and existing homes sold in the third quarter of the year were affordable to families earning the national median income of $64,200. The affordability measure rose slightly from the 72.6 percent set last quarter and has remained above the 70 percent threshold for 11 consecutive quarters. The HOI rarely rose above 60 percent prior to this period.

“With interest rates at historically low levels and markets across the country beginning to improve, homeownership is within reach of more households than it has been for nearly two decades,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “However, tough economic conditions — particularly in markets that experienced major changes in house prices and production — as well as extremely tight credit conditions confronting home buyers and builders continue to remain significant obstacles to many potential home sales.”

Lakeland-Winter Haven, Fla., was the most affordable major housing market in the country during the third quarter of the year. In Lakeland, 92.5 percent of all homes sold were affordable to households earning the area’s median family income of $53,800.

Other major metro housing markets ranking near the top of the index were Toledo, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; and Ogden-Clearfield, Utah, respectively.

Among smaller housing markets, the most affordable was Fairbanks, Alaska, where 97.8 percent of homes sold during the third quarter of 2011 were affordable to families earning a median income of $91,700. Also ranking near the top were Kokomo, Ind.; Cumberland, Md.-W.Va.; Davenport-Moline-Rock Island, Iowa-Ill.; and Lima, Ohio.

New York-White Plains-Wayne, N.Y.-N.J., led the nation as the least affordable major housing market during the third quarter of 2011. In New York, 23.3 percent of all homes sold during the quarter were affordable to those earning the area’s median income of $67,400. The New York metropolitan division has held the least affordable market position for the last 14 quarters.

Other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif., respectively.

Ocean City, N.J., where 41.7 percent of the homes were affordable to families earning the median income of $70,100, was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included Santa Cruz-Watsonville, Calif.; San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.

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EDITOR’S NOTE: The NAHB/Wells Fargo HOI is a measure of the percentage of homes sold in a given area that are affordable to families earning that area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by First American Real Estate Solutions, a marketing company. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Board.

The NAHB/Wells Fargo Housing Opportunity Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public.