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Housing Affordability Rises for Third Straight Quarter
Indianapolis remained the most affordable major U.S. housing market for the 11th consecutive quarter in the first quarter of 2008, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI), which was released last week.
Nationwide, homes became more affordable for the third consecutive quarter, with the HOI indicating that affordability rose to its highest level since the second quarter of 2004.
"Today's HOI reading shows that 53.8% of all new and existing homes that were sold during the first quarter were affordable to families earning the national median income of $61,500," said NAHB President Sandy Dunn. "Three factors combined to substantially increase housing affordability nationwide — mortgage rates returning to near the record low levels of a few years ago, a $2,500 rise in family income nationwide and lower house prices."
The national weighted interest rate on fixed and adjustable-rate mortgages — a key component in calculating the HOI — was 6.02% in the first quarter, compared to 6.42% in the fourth quarter of 2007, and the lowest since the third quarter of 2005.
In the nation's most affordable major housing market of Indianapolis, 90.1% of homes sold in the first quarter were affordable to families earning the area's median household income of $65,100.
Also near the top of the list for affordable major metros were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; Detroit-Livonia-Dearborn, Mich.; and Harrisburg-Carlisle, Pa., in that order.
Among smaller metro markets with populations below 500,000, Kokomo, Ind. outranked all others in terms of housing affordability during the first quarter of 2008. In Kokomo, 95.3% of all homes sold during the period were affordable to families earning that area's median household income of $57,400.
For the 14th consecutive quarter, Los Angeles-Long Beach-Glendale, Calif., remained on the index as the nation's least-affordable major housing market. In that market, 10.5% of new and existing homes sold during the first quarter were affordable to those earning the area's median family income of $59,800.
Other major metros at the bottom of the housing affordability chart included New York-White Plains-Wayne, N.Y.-N.J.; San Francisco-San Mateo-Redwood City, Calif.; Miami-Miami Beach- Kendall, Fla.; and Santa Ana-Anaheim-Irvine, Calif., in that order.
Among metro areas smaller than 500,000 people, the five markets at the bottom of the affordability chart were all located in California, starting with Salinas as the least affordable and followed by San Luis Obispo-Paso Robles, Napa, Santa Barbara-Santa Maria-Goleta and Santa Cruz-Watsonville, respectively.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 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.
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