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Housing Affordability Up Just a Notch in First Quarter
Indianapolis was the nation's most affordable major housing market for a third consecutive quarter, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) for this year’s first quarter, which was released last week.
The first-quarter index found housing affordability across the nation virtually unchanged from the final three months of 2005, as slightly lower home prices and higher household incomes helped offset an upward movement in mortgage rates. The HOI rose marginally from its lowest level on record, 41.0 at the end of last year, to 41.3 in the first quarter of 2006.
"The latest HOI shows that only 41.3% of new and existing homes that were sold during this year's first quarter were affordable to families earning the national median income," said NAHB President David Pressly. "This is down from just over 50% of all homes sold in the first quarter of 2005 that were affordable to the average family."
"Compared to the fourth quarter of last year, the median price of all new and existing homes that were sold during the first quarter of 2006 declined 1.5%, while the national median income, as calculated by the federal government on an annual basis, was adjusted upward from $58,000 to $59,600," explained NAHB Chief Economist David Seiders. "These factors kept housing affordability from sliding further despite the fact that the national weighted interest rate on fixed- and adjustable-rate mortgages rose 18 basis points in the period, from 6.21% to 6.39."
In Indianapolis, just over 90% of homes sold in the first quarter were affordable to families earning the area's median household income of $65,100. The median sales price of all homes sold in Indianapolis during that time was $113,000 — down from $120,000 at the end of 2005.
Also near the top of the list of affordable major metro areas were: Youngstown-Warren-Boardman, Ohio-Pa.; Detroit-Livonia-Dearborn, Mich.; Rochester, N.Y.; and Buffalo-Niagara Falls, N.Y., in that order.
Among smaller housing markets with populations below 500,000, the most affordable were: Lansing-East Lansing, Mich.; Davenport-Moline-Rock Island, Iowa-Ill.; Lima, Ohio; Battle Creek, Mich.; and Bay City, Mich., respectively.
Los Angeles-Long Beach-Glendale, Calif. kept its standing in the first quarter as the nation’s least affordable major metro market, with just 1.9% of new and existing homes sold in the area being affordable to families earning a median household income of $56,200. The median price of the homes sold in the area during the first quarter was $500,000, which was unchanged from the previous quarter.
Other major metros at the bottom of the housing affordability chart included: Santa Ana-Anaheim-Irvine, Calif.; San Diego-Carlsbad-San Marcos, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and Nassau-Suffolk, N.Y.
Santa Barbara-Santa Maria, Calif. was the least affordable smaller housing market, followed by Modesto, Salinas, Merced and Napa, all of which are located in California.
 Want to Know Your State and Metro Forecasts for 2006?
Anticipate the trends, make better decisions and improve your bottom line. HousingEconomics.com, the online publication from NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. In-depth analysis and detailed Excel tables and overviews are available for all the state and metro forecasts.
HousingEconomics.com combines unique scientific research with practical applications providing insights that are original and useful. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently, and includes the following features:
- Home Builders Forecast ― state, metro, non-residential, remodeling, etc.
- Exclusive access to NAHB’s staff of economists
- The Seiders' Report
- Housing Market Statistics — 29 tables including housing starts, home prices, building permits, home sales, value of new construction, etc.
- Housing Activity
- In Depth-Analysis
For more details, visit www.housingeconomics.com.
Seiders Says, 'Builders Have Not Lost Touch With Demand' on the NAHB Economics Blog
NAHB Chief Economist David Seiders says that "builders have not lost touch with demand" on NAHB's economics blog, “Seiders on Housing” — an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to Seiders' expert opinions, projections and responses. Then let Seiders know what you think by giving your perspective.
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