Slightly lower median home prices along with steady mortgage rates contributed to higher housing affordability in the first quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). In all, 65.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $63,900. This is slightly higher from the 64.7 percent of homes sold that were affordable to median-income earners in the fourth quarter.
Meanwhile, the national median home price dipped from $205,000 in the fourth quarter to $195,000 in the first quarter while average mortgage interest rates were virtually unchanged, moving from 4.54 percent to 4.57 percent in the same period.
"Housing affordability remains strong and this is an encouraging sign as the spring home building season moves into high gear," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.
"As home prices and mortgage interest rates are unlikely to go down, the first quarter HOI is another indicator that this is an opportune time to buy," said NAHB Chief Economist David Crowe.
Syracuse, N.Y. was the nation's most affordable major housing market, as 93.7 percent of all new and existing homes sold in this year's first quarter were affordable to families earning the area's median income of $67,700. Meanwhile, Cumberland, Md-W.Va. claimed the title of most affordable smaller market, with 96.3 percent of homes sold in the first quarter being affordable to those earning the median income of $54,100.
Other major U.S. housing markets at the top of the affordability chart in the first quarter included Buffalo-Niagara Falls, N.Y.; Youngstown-Warren-Boardman, Ohio-Pa.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio; in descending order.
Smaller markets joining Cumberland at the top of the affordability chart included Springfield, Ohio; Kokomo, Ind.; Mansfield, Ohio; and Lima, Ohio.
For a sixth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. held the lowest spot among major markets on the affordability chart. There, just 13.3 percent of homes sold in the first quarter were affordable to families earning the area's median income of $100,400.
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 21.1 percent of all new and existing homes sold were affordable to families earning the area's median income of $77,900. Other small markets at the lowest end of the affordability scale included Napa, Salinas, San Luis Obispo-Paso Robles, and Santa Rosa-Petaluma, respectively.