Home Affordability Index Slips in Q1, but Remains Strong
By: Esther Cho
As interest rates stay low, housing affordability across the country remained strong in the first quarter but showed signs of weakening, according to data from the National Association of Home Builders (NAHB)/ Wells Fargo Housing Opportunity Index (HOI).
According to the index, 73.7 percent of new and existing-homes sold in the first quarter of this year were affordable to families earning the U.S. median income of $64,400. In the fourth quarter of last year, 74.9 percent of homes were considered to be affordable to median-income earners. A year ago, affordability was even stronger, at 77.5 percent.
Despite the decrease, NAHB Chairman Rick Judson noted the HOI has still stayed high over the past four years.
“The HOI has not slipped below 70 since the end of 2008,” he explained. “That said, from a builder’s perspective, it
should be noted that rising costs for building materials, lots and labor are making it somewhat more expensive to construct new homes in today’s market.”
Among the largest metros, or areas with a population of 500,000 or more, Ogden-Clearfield in Utah ranked as the most affordable metro for the third straight quarter. In Ogden-Clearfield, 93.7 percent of homes are affordable to median-income earners, according to the index.
Other large metros in the top five were Indianapolis (92.7 percent); Lakeland, Florida (92.1 percent); Youngtown, Ohio (91.9 percent); and Syracuse, New York (91.6 percent).
San Francisco-San Mateo-Redwood City kept its place as the least affordable large metro, where only 28.9 percent of median-income earners could afford a home. New York-White Plains-Wayne, New York-New Jersey followed closely behind at 29.7 percent.
Filling out the next three spots were three California metros: Santa Ana (35.8 percent), Los Angeles (39.9 percent), and San Jose (43.3 percent).
Among smaller metros, Mansfield, Ohio ranked as the most affordable metro, while another California metro, Santa Cruz-Watsonville, was the least affordable.
“The bottom line is that, for consumers who can qualify for a mortgage at today’s attractive rates, the majority of homes being sold remain within their grasp in markets nationwide,” added David Crowe, NAHB’s chief economist.
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