Housing Affordability Ticks Back Up in Third Quarter

November 21, 2011 (Jeff Alan)

Housing affordability ticked back up slightly in the third quarter of 2011 according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) as low interest rates and stable home prices nationwide kept housing affordability near its highest level in more than twenty years.

The latest data shows that 72.9 percent of all homes in the third quarter of the year were affordable to families earning the national median income of $64,200, up from 72.6 percent in the second quarter. It was the 11th consecutive quarter that the HOI was above the 70 percent threshold.

The record high for the Index is 74.6 percent, posted in the first quarter of 2011.

“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.”

The most affordable major market area in the Index was the Lakeland-Winter Haven, FL, area, where 92.5 percent of the homes were affordable to households earning the area’s median family income.

The other top major market areas that were the most affordable were Toledo, OH, Youngstown-Warren-Boardman, OH-PA., Indianapolis-Carmel, IN and Ogden-Clearfield, UT.

The least affordable major market area in the Index was the New York-White Plains-Wayne, NY-NJ, area, where only 23.3 percent of the homes were affordable to households earning the area’s median family income. The New York-White Plains-Wayne area has held the position as the least affordable area for the last 14 quarters.

The other major market areas that had the least affordable housing during the third quarter were San Francisco-San Mateo-Redwood City, CA, Honolulu; Santa Ana-Anaheim-Irvine, CA, and Los Angeles-Long Beach-Glendale, CA.

In the smaller housing markets, the most affordable area during the quarter was Fairbanks, AK, area, where 97.8 percent of homes sold were affordable to households earning the area’s median family income.

The other smaller housing markets that had the most affordable housing were Kokomo, IN, Cumberland, MD-WV, Davenport-Moline-Rock Island, IA-IL, and Lima, OH.

The smaller housing market that was least affordable was Ocean City, NJ, area, where 41.7 percent of the homes were affordable to families earning the area’s median income.

The other smaller housing markets that had the least affordable housing were Santa Cruz-Watsonville, CA, San Luis Obispo-Paso Robles, CA, Santa Barbara-Santa Maria-Goleta, CA, and Brownsville-Harlingen, TX.

Tags: NAHB, Wells Fargo, housing affordability, national median income, HOI

Sources:
NAHB