Housing Affordability Slightly Lower in Third Quarter

November 13th, 2014
in econ_news

from the National Association of Home Builders (NAHB)

Firming home prices in markets across the country contributed to a slight dip in nationwide housing affordability in the third quarter of 2014, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today.

Follow up:


In all, 61.8 percent of new and existing homes sold between the beginning of July and the end of September were affordable to families earning the U.S. median income of $63,900. This is down from the 62.6 percent of homes sold that were affordable to median-income earners in the second quarter.

The national median home price increased from $214,000 in the second quarter to $221,000 in the third quarter. Meanwhile, average mortgage interest rates decreased from 4.44 percent to 4.35 percent in the same period.

"Low mortgage rates, strong job growth and affordable home prices make this a good time to buy a home," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

"Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards," said NAHB Chief Economist David Crowe. "Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year."

Youngstown-Warren-Boardman, Ohio-Pa. claimed the title of the nation's most affordable major housing market, as 89.1 percent of all new and existing homes sold in this year's third quarter were affordable to families earning the area's median income of $52,700.

Meanwhile, Cumberland, Md.-W.Va. and Kokomo, Ind. each tied as the most affordable smaller market, with 94.8 percent of homes sold in the third quarter being affordable to those earning the median income of $54,100 in Cumberland and $56,900 in Kokomo.
Other major U.S. housing markets at the top of the affordability chart in the third quarter included Syracuse, N.Y.; Indianapolis-Carmel, Ind.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio; in descending order.

Meanwhile, smaller markets joining Cumberland and Kokomo at the top of the affordability chart included Davenport-Moline-Rock Island, Iowa-Ill.; Mansfield, Ohio; and Springfield, Ohio; in descending order.

For an eighth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. was the nation's least affordable major housing market. There, just 11.4 percent of homes sold in the third quarter were affordable to families earning the area's median income of $100,400.

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

All five least affordable small housing markets were in California. At the very bottom was Napa, where 10.2 percent of all new and existing homes sold were affordable to families earning the area's median income of $70,300. Other small markets included Santa Cruz-Watsonville, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles; in descending order.

HOUSING OPPORTUNITY INDEX, MEDIAN PRICE & INTEREST RATES


National
Interest Rates (3) No. of
Year/ HOI Median Weighted Percent Share Metro
Quarter (%) Price Interest Fixed ARM Fixed ARM Areas


( $000's) Rate (1) (2)

Covered
1991







I - $99 9.09 9.50 7.62 78% 22% 147
II - $105 9.06 9.53 7.28 79% 21% 173
III - $110 9.33 9.74 8.10 76% 24% 191
IV - $106 8.78 9.08 7.71 75% 25% 176
1992







I 53.9 $105 8.75 8.73 6.98 82% 18% 169
II 55.5 $105 8.42 8.87 6.95 79% 21% 173
III 57.5 $110 7.93 8.30 6.43 80% 20% 190
IV 60.0 $114 7.76 8.22 6.21 77% 23% 187
1993







I 64.7 $105 7.57 8.02 5.98 78% 22% 202
II 65.1 $109 7.27 7.66 5.89 78% 22% 186
III 65.1 $110 7.04 7.31 5.72 83% 17% 188
IV 66.8 $112 6.80 7.15 5.42 80% 20% 178
1994







I 67.5 $112 6.91 7.32 5.52 77% 23% 174
II 60.5 $114 7.42 8.17 6.14 63% 37% 186
III 61.7 $117 7.72 8.59 6.58 57% 43% 185
IV 62.3 $114 7.82 8.92 6.84 47% 53% 160
1995







I 61.2 $114 8.15 9.13 7.25 48% 52% 179
II 60.5 $117 7.99 8.41 7.20 65% 35% 187
III 61.3 $118 7.73 7.94 7.06 77% 23% 191
IV 63.4 $117 7.53 7.74 6.81 78% 22% 192
1996







I 67.5 $118 7.35 7.43 6.91 84% 16% 185
II 63.1 $120 7.84 8.14 7.08 72% 28% 172
III 61.2 $122 7.97 8.36 7.19 67% 33% 174
IV 64.1 $120 7.73 8.06 6.94 71% 29% 184
1997







I 66.5 $120 7.75 8.01 6.97 75% 25% 190
II 64.3 $123 7.91 8.20 7.06 75% 25% 196
III 63.7 $127 7.65 7.96 6.82 80% 20% 195
IV 64.8 $127 7.47 7.63 6.71 83% 17% 193
1998







I 67.6 $129 7.22 7.31 6.62 87% 13% 191
II 64.8 $135 7.21 7.31 6.53 86% 14% 193
III 64.4 $138 7.08 7.18 6.40 88% 12% 187
IV 66.2 $136 6.88 6.95 6.22 90% 10% 186
1999







I 69.6 $134 6.95 7.03 6.29 88% 12% 181
II 67.0 $138 7.10 7.85 6.35 83% 17% 184
III 63.4 $141 7.52 7.25 6.69 72% 28% 186
IV 63.8 $139 7.58 7.98 6.62 70% 30% 192
2000







I 62.8 $140 7.93 8.32 7.09 69% 31% 184
II 58.4 $147 8.20 8.55 7.47 68% 32% 173
III 58.1 $151 8.01 8.29 6.98 79% 21% 177
IV 59.3 $151 7.75 7.95 6.73 84% 16% 180
2001







I 56.9 $153 7.21 7.28 6.61 89% 11% 181
II 63.4 $156 7.15 7.23 6.49 89% 11% 187
III 61.5 $161 7.06 7.17 6.42 85% 15% 186
IV 64.1 $158 6.71 6.80 6.08 88% 12% 181
2002







I 64.8 $160 6.86 7.03 6.01 83% 17% 191
Annual 63.7 $164 6.54 6.73 5.66 83% 17% 223
2003







IV 58.9 $186 5.83 6.09 5.13 73% 27% 161
Annual 63.7 $176 5.75 5.92 5.03 81% 19% 166
2004







I 61.2 $187 5.62 5.90 4.90 73% 27% 163
II 55.6 $204 5.72 6.09 5.06 64% 36% 162
III 50.4 $225 5.83 6.12 5.35 62% 38% 162
IV 52.0 $219 5.77 5.93 5.48 64% 36% 160
2005







I 50.1 $225 5.79 5.95 5.43 68% 32% 158
II 45.9 $241 5.82 6.02 5.42 67% 33% 158
III 43.2 $253 5.84 5.97 5.49 72% 28% 161
IV 41.0 $254 6.21 6.36 5.81 71% 29% 160
2006







I 41.3 $250 6.39 6.51 6.10 72% 28% 182
II 40.6 $250 6.65 6.72 6.45 75% 25% 199
III 40.4 $248 6.77 6.82 6.55 81% 19% 203
IV 41.6 $247 6.52 6.55 6.36 86% 14% 202
2007







I 43.9 $238 6.40 6.41 6.29 89% 11% 219
II 43.1 $240 6.44 6.46 6.27 89% 11% 215
III 42.0 $239 6.73 6.76 6.54 88% 12% 215
IV 46.6 $227 6.42 6.43 6.22 92% 8% 220
2008







I 53.8 $219 6.02 6.05 5.66 92% 8% 223
II 55.0 $215 6.12 6.16 5.69 92% 8% 222
III 56.1 $206 6.39 6.43 5.91 92% 8% 222
IV 62.4 $190 6.02 6.02 6.03 98% 2% 222
2009







I 72.5 $176 5.14 5.14 * 100% 0% 222
II 72.3 $177 5.03 5.03 * 100% 0% 226
III 70.1 $179 5.33 5.33 * 100% 0% 227
IV 70.8 $180 5.11 5.11 * 100% 0% 227
2010







I 72.2 $175 5.12 5.12 * 100% 0% 225
II 72.3 $179 5.11 5.11 * 100% 0% 225
III 72.1 $180 4.79 4.79 * 100% 0% 226
IV 73.9 $175 4.59 4.59 * 100% 0% 223
2011







I 74.6 $165 4.98 4.98 * 100% 0% 222
II 72.6 $172 4.95 4.95 * 100% 0% 223
III 72.9 $176 4.71 4.71 * 100% 0% 225
IV 75.9 $170 4.43 4.43 * 100% 0% 225
2012







I 77.5 $162 4.32 4.32 * 100% 0% 226
II 73.8 $185 4.05 4.05 * 100% 0% 226
III 74.1 $189 3.80 3.80 * 100% 0% 225
IV 74.9 $188 3.57 3.57 * 100% 0% 226
2013







I 73.7 $184 3.62 3.62 * 100% 0% 222
II 69.3 $202 3.73 3.73 * 100% 0% 225
III 64.5 $211 4.45 4.45 * 100% 0% 223
IV 64.7 $205 4.54 4.54 * 100% 0% 224
2014







I 65.5 $195 4.57 4.57 * 100% 0% 225
II 62.6 $214 4.44 4.44 * 100% 0% 225
III 61.8 $221 4.35 4.35 * 100% 0% 227









Source: Core Logic, HUD & Federal Housing Finance Agency. Analyzed by NAHB Economics & Housing Policy Group







Note: (1) Effective closing rate for all fixed-rate mortgage loans for all major lenders, as reported by FHFB.







(2) Effective closing rate for all ARM mortgage loans for all major lenders, as reported by FHFB.







(3) Share of all loans closed by all major lenders.







*insufficient data to report meaningful numbers (<1%)















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