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Housing Affordability Remains Sub Par in Second Quarter
The Indianapolis-Carmel, Ind. metropolitan area is the most affordable major U.S. housing market for the eighth consecutive business quarter in rankings for this year’s second quarter on the NAHB/Wells Fargo Housing Opportunity Index (HOI).
On a nationwide basis, housing affordability remained well below the levels recorded prior to the price acceleration accompanying the 2004 to 2005 housing boom, although there was some improvement from a year earlier.
The HOI indicated that 43.1% of new and existing homes sold in the U.S. during the second quarter were affordable to families earning the national median income, compared to 43.9% in this year’s first quarter and 40.6% during the second quarter of 2006.
“The data show that housing affordability generally remains a serious issue even though national average house prices are down from their 2005 highs,” said NAHB Chief Economist David Seiders. “Moreover, the abrupt tightening of lending standards in the subprime sector — a trend that is now bleeding into other sectors of the mortgage market — is having serious impacts on the ability of many families to purchase homes.”
In the nation’s most affordable major housing market of Indianapolis, approximately 87% of new and existing homes sold during this year’s second quarter were affordable to families earning the area’s median household income of $63,800.
Also bobbing to the top of the list of the most affordable major metros in the second quarter were Detroit-Livonia-Dearborn, Mich.; Youngstown-Warren-Boardman, Ohio-Pa.; Buffalo-Niagara Falls, N.Y.; and Grand Rapids-Wyoming, Mich., respectively.
Midwestern metros also dominated the list of the most affordable smaller housing markets (defined as those with fewer than 500,000 people). Kokomo, Ind., was at the top of that list, followed by Bay City, Mich.; Lansing-East Lansing, Mich.; Mansfield, Ohio; and Saginaw-Saginaw Township North, Mich.
Landing at the bottom of the affordability scale for the 11th consecutive quarter was Los Angeles-Long Beach-Glendale, Calif., where just 3% of homes sold in the second three months of this year were affordable for families earning the metro’s median household income of $61,700.
As usual, Los Angeles shared the bottom of the affordability scale with other major California metros, including Santa Ana-Anaheim-Irvine; San Francisco-San Mateo-Redwood City; and Modesto in the second, third and fifth least affordable positions, respectively. As the fourth-least affordable major metro, New York-White Plains-Wayne, N.Y.-N.J. was the only non-California location in the bottom five.
Continuing a trend, all five of the least affordable small cities with populations under 500,000 were located in California during the second quarter, with Salinas at the very bottom of the listings, followed by Merced; Santa Barbara-Santa Maria-Goleta; San Luis Obispo-Paso Robles; and Napa.
 Attend the Fall Construction Forecast Conference in October
Plan to attend NAHB's Construction Forecast Conference on Oct. 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
Register by Sept. 7 and save $50 off the regular registration fee.
For more information, visit www.nahb.org/cfc.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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