The National Association of Home Builders (NAHB) released its National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) for the fourth quarter of 2013.
The index, which 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, shows that slightly lower median home prices along with a small uptick in mortgage rates contributed to housing affordability holding steady at the end of 2013.
In all, 64.7 percent of new and existing homes sold between the beginning of October 2013 and end of December 2013 were affordable to families earning the U.S. median income of $64,400. This is virtually the same as the 64.5 percent of homes sold that were affordable to median-income earners in the third quarter of 2013.
Meanwhile, the national median home price dipped from $211,000 in the third quarter to $205,000 in the fourth quarter, while average mortgage interest rates rose from 4.45 percent to 4.54 percent in the same period.
“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, builders continue to face challenges, including tight credit for home buyers, inaccurate appraisals and a shortage of workers and buildable lots.”
Youngstown-Warren-Boardman, Ohio-Pa., was the nation’s most affordable major housing market, as 89.4 percent of all new and existing homes sold in the fourth quarter of last year were affordable to families earning the areas’ median incomes of $53,900. Meanwhile, Kokomo, Ind., claimed the title of most affordable smaller market, with 96.3 percent of homes sold in the fourth quarter being affordable to those earning the median income of $60,100.
Other major U.S. housing markets at the top of the affordability chart in the fourth quarter (ranked in descending order) included Harrisburg-Carlisle, Pa.; Syracuse, N.Y.; Buffalo-Niagara Falls, N.Y.; and Scranton-Wilkes-Barre, Pa.
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.
For a fifth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif., held the lowest spot among major markets on the affordability chart. In this market, just 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 (ranked in descending order) 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.
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.