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Housing affordability showing signs of stabilizing

February 20, 2014
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Median home prices take a slight dip

According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), in the fourth quarter, median home prices fell slightly, and mortgage rates rose slightly, both contributing to housing affordability “holding steady.”

Fully 64.7 percent of new and existing homes sold in the fourth quarter were affordable to families with the U.S. median income of $64,400, up 0.2 percent from the third quarter (thus “holding steady”).

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The national median home price fell from $211,000 in the third quarter to $205,000 in the fourth quarter, as average mortgage interest rates rose from 4.45 percent to 4.54 percent in the same period.

Housing affordability stabilizing on a national level

“Housing affordability is stabilizing at a time when pent-up demand and ongoing job growth are helping housing markets across the nation to gradually strengthen,” said NAHB Chairman Kevin Kelly.

“While this bodes well for housing in 2014,” Kelly adds, “builders continue to face challenges, including tight credit for home buyers, inaccurate appraisals, and a shortage of workers and buildable lots.”

Regional performance varied

In the fourth quarter, the most affordable major housing market was Youngstown-Warren-Boardman, Ohio-Pa, as 89.4 percent of all new and existing homes sold in this year’s fourth quarter were affordable to families earning the areas’ median incomes of $53,900.

Kokomo, Ind. is the most affordable smaller market, with 96.3 percent of homes sold in the fourth quarter being affordable to those earning the local median income of $60,100.

Major housing markets Harrisburg-Carlisle, Pa.; Syracuse, N.Y.; Buffalo-Niagara Falls, N.Y.; and Scranton-Wilkes-Barre, Pa.; were also in the most affordable bracket, in descending order. Smaller markets joining Kokomo at the top of the affordability chart included Springfield, Ohio; Monroe, Mich.; Vineland-Millville-Bridgeton, N.J.; and Cumberland, Md.-W.Va.

The least affordable market was the San Francisco area for the fifth consecutive quarter, where only 14.1 percent of homes sold in the fourth quarter were affordable to families earning the area’s median income of $101,200.

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

All of the five least affordable small housing markets were in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 18.6 percent of all new and existing homes sold were affordable to families earning the area’s median income of $73,800. Other small markets at the lowest end of the affordability scale included Salinas, San Luis Obispo-Paso Robles, Napa, and Santa Rosa-Petaluma, respectively.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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