Low Mortgage Rates Boost Affordability at Year's End
Indianapolis remained the most affordable major U.S. housing market for the 10th consecutive quarter in the fourth quarter of 2007, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI), released on Feb. 19.
Nationwide, housing affordability increased during the quarter and on a year-over-year basis, rising to the highest level since the first quarter of 2005.
The latest HOI indicated that 46.6% of all new and existing homes sold during the fourth quarter were affordable to families earning the national median income of $59,000. "With mortgage rates returning to near the record low levels of a few years ago, more potential home buyers across the country are finding that they now can buy the home of their dreams," said NAHB President Sandy Dunn.
The national weighted interest rate on fixed- and adjustable-rate mortgages — a key component in calculating the HOI — was 6.42% in the fourth quarter, down from 6.73% in the third quarter.
In Indianapolis, 89.5% of homes sold in the fourth quarter were affordable to families earning the area's median household income of $63,800.
Also near the top of the list for affordable major metros were: Youngstown-Warren-Boardman, Ohio-Pa.; Detroit-Livonia-Dearborn, Mich.; Toledo, Ohio; and Grand Rapids-Wyoming, Mich., in that order.
Among smaller metro markets with populations below 500,000, Kokomo, Ind. was the most affordable in the fourth quarter, with 92.9% of all homes sold there affordable to families earning the area's median household income of $59,700.
Los Angeles-Long Beach-Glendale, Calif. remained the least-affordable major housing market for the 13th consecutive quarter during the final three months of 2007, with only 6.2% of new and existing homes sold there affordable to those earning a median family income of $61,700.
Other major metros at the bottom of the housing affordability chart included: San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and Oxnard-Thousand Oaks-Ventura, Calif.; in that order.
Among metro areas with less than 500,000 people, the least affordable were all located in California: Napa, Salinas, Merced, San Luis Obispo-Paso Robles and Santa Barbara-Santa Maria-Goleta, respectively.
Want to Know the Housing Forecast for the Top 100 Metros?
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Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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.