Low interest rates and home prices helped lift housing affordability slightly in the fourth quarter of 2014, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. Overall, 62.8 percent of new and existing homes sold between the beginning of October and the end of December were affordable to families earning $63,900, the national median income. In the third quarter, the percentage stood at 61.8 percent.
“This upturn in affordability for the final quarter of 2014 is a positive development and is in line with what we are hearing from builders in the field that more prospective buyers are starting to move forward in the marketplace,” says NAHB Chairman Tom Woods.
According to an affordability report from the National Association of REALTORS®, the median single-family home price rose to $208,700 in the fourth quarter. But an increase in the national family median income, mixed with low interest rates, helped to slightly improve affordability in the fourth quarter.
“Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying,” Lawrence Yun, NAR’s chief economist, said in a statement.
NAHB’s report shows that the nation’s most affordable major housing market in the fourth quarter was Syracuse, N.Y., where 92.8 percent of all new and existing homes sold were affordable to families earning the area’s median income of $67,700. Other major affordable housing markets included: Akron, Ohio; Dayton, Ohio; Harrisburg-Carlisle, Pa.; and Scranton-Wilkes-Barre, Pa.
Among smaller markets, the metros leading in affordability in the fourth quarter of 2014 were Cumberland, Md.-W.Va. (96.2 percent of the homes were affordable to families earning the area’s median income), followed by Kokomo, Ind.; Wheeling, W.Va.-Ohio; Binghamton, N.Y.; and Salisbury, Md.
At the other end of the spectrum, San Francisco-San Mateo-Redwood City, Calif., continued to rank as the nation’s least affordable major housing market, where 11.1 percent of the homes sold in the fourth quarter were affordable to families earning the area’s median income of $100,400, NAHB’s index shows.