Rising home prices more than offset lower mortgage rates in dampening housing affordability in the second quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Sixty-two percent of new and existing homes sold between the beginning of April and the end of June were affordable to families earning the U.S. median income of $65,700, the index showed. That is down from the 65 percent of homes deemed affordable in the first quarter.
The median home price nationwide rose from $223,000 in the first quarter to $240,000 in the second quarter. Average mortgage rates moved lower from 4.05 percent to 3.88 percent.
“Though we have seen a modest drop in affordability in the second quarter, the [index] is still fairly high by historical standards,” says Robert Dietz, NAHB’s chief economist. “Rising employment, favorable mortgage rates and increasing household formations will keep the housing market on a gradual, upward path during the rest of the year.”
The index showed the most affordable major housing market is: Youngstown-Warren-Boardman, Ohio-Pa., where 91.1 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $53,900. Other markets deemed the most affordable included Scranton-Wilkes-Barre-Hazleton, Pa.; Syracuse, N.Y.; Harrisburg-Carlisle, Pa.; and Indianapolis-Carmel-Anderson, Ind.
On the other hand, the least affordable major housing market in the country is: San Francisco-Redwood City-South San Francisco, Calif., where 8.5 percent of homes sold in the second quarter were affordable to families earning the area’s median income of $104,700. Other major metros that were among the least affordable in the nation included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Rafael.