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Housing Affordability Improves Some in First Quarter
The metropolitan areas encompassing Indianapolis-Carmel, Ind. and Youngstown-Warren-Boardman, Ohio-Pa. were tied for the most affordable major U.S. housing market in this year's first quarter, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI), which was released on June 28. Meanwhile, lower home prices and mortgage interest rates helped boost housing affordability across the nation.
"The latest HOI shows that about 44% of new and existing homes that were sold in the United States during this year's first quarter were affordable to families earning the national median income," said NAHB President Brian Catalde. "This is up from 41.6% of homes sold in the final quarter of 2006, and is likely the result of lower house prices as well as the very favorable financing conditions that existed at the beginning of this year."
"The national weighted interest rate on prime quality fixed- and adjustable-rate home mortgages, which is used in calculating the HOI, slipped to 6.4% in the first quarter of this year, down from 6.52% in the final quarter of 2006 and the lowest level since the first quarter of 2006, when it was gauged at 6.39%," said NAHB Chief Economist David Seiders.
"Meanwhile, following a strong nationwide surge that started in early 2004 and continued through mid-2006, overall home prices weakened for three consecutive quarters leading up to and including the period encompassing January through March of 2007,” Seiders said.
“Together, these factors improved the typical family's ability to purchase a home," he said, "although tightening of lending standards in the subprime component of the mortgage market certainly affected more marginal credit risks as the first quarter drew to a close."
In the nation's most affordable major housing markets of Indianapolis and Youngstown, 89% of new and existing homes that were sold during the first quarter of this year were affordable to families earning those areas' respective median household incomes of $63,800 and $51,400.
The median sales price of all Indianapolis homes sold in that time frame was $116,000 and the median sales price of all Youngstown-area homes sold was just $78,000.
Also near the top of the list for affordable major metros in the first quarter was Dayton, Ohio, followed by Detroit-Livonia-Dearborn, Mich., and Grand Rapids-Wyoming, Mich.
Midwestern metros also dominated the list of the most affordable smaller housing markets with fewer than 500,000 people. Kokomo, Ind. was at the top of the list, followed by Lansing-East Lansing, Mich.; Lima, Ohio; Saginaw-Saginaw Township North, Mich.; and Bay City, Mich., in that order.
Once again at the bottom of the affordability scale was Los Angeles-Long Beach-Glendale, Calif., where just 3% of homes sold in the first quarter were affordable to families earning the metro's median household income of $61,700. The median price of all homes sold in that area was $525,000.
As usual, Los Angeles shared the bottom of the affordability scale with other major California metros, including Santa Ana-Anaheim-Irvine, the second least affordable; San Francisco-San Mateo-Redwood City, the fourth least affordable; and Modesto as the fifth least affordable large housing markets in the nation. The third least affordable major metro, New-York-White Plains-Wayne, N.Y.-N.J., was the only non-California location in the bottom five.
All five of the least affordable small cities with populations under 500,000 were located in California during the first quarter, with Salinas at the very bottom of the chart followed by Merced, Santa Barbara-Santa Maria-Goleta, Napa and San Luis Obispo-Paso Robles.
 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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