Housing Affordability Rises to Highest Level in Four Years

With home prices decreasing and interest rates holding at historically low levels, the number of potential home buyers nationwide who can afford to buy new and existing homes has reached the highest level in more than four years, according to NAHB’s Housing Opportunity Index (HOI).

According to the latest HOI readings, 56.1% of all new and existing homes that were sold during the third quarter were affordable to families earning the national median income of $61,500, far higher than the 40.4% of families who could afford homes at the peak of the housing boom.

“If there is a silver lining to this crisis, it would be that some housing markets have become more affordable with a larger inventory to choose from,” said NAHB Chairman Sandy Dunn. “But this is undeniably a crisis and Congress needs to act on a housing stimulus to get the market moving again."

The two most affordable major housing markets in the country during this year's third quarter were Indianapolis and Youngstown, Ohio, according to the HOI. In both places, 91% of the homes sold in the third quarter were affordable to families earning the areas' median household incomes of $65,100 and $52,000, respectively.

Also among the most affordable major metropolitan areas were Grand Rapids-Wyoming, Mich.; Warren-Troy-Farmington Hills, Mich.; and Detroit-Livonia-Dearborn, Mich., in that order.

Springfield, Ohio, where 92.9% of all homes sold in the third quarter were affordable to families earning that area’s median household income of $54,500, was the most affordable smaller metro market with populations under 500,000.

New York-White Plains-Wayne, N.Y.-N.J., was the nation’s least affordable major housing market for the second consecutive quarter. In the New York market, 10.6% of the new and existing homes sold during the third quarter were affordable to those earning the area’s median family income of $63,000.

Other major metro areas at the bottom of the housing affordability chart included San Francisco-San Mateo-Redwood City, Calif.; Nassau-Suffolk, N.Y.; Los Angeles-Long Beach-Glendale, Calif.; and Miami-Miami Beach- Kendall, Fla., in that order.

Among smaller metro areas, markets at the bottom of the affordability chart were San Luis Obispo-Paso Robles, Calif.; Santa Cruz-Watsonville, Calif.; Napa, Calif.; and Bend, Ore., respectively.