Housing affordability dipped slightly during the second quarter according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), released today.  The data shows that 73.8 percent of all new and existing homes sold in the second quarter were affordable to families earning the national median income of $65,000, down from a record high 77.5 percent of homes that were affordable to median-income earners as of the first quarter.

This is not necessarily bad news as the decrease in affordability is largely attributable to rising home prices in metropolitan areas across the country.  Ninety-two percent of the MSAs covered by the NAHB survey saw an increase in median home prices between the first and second quarters of the year. 

NAHB Chairman Barry Rutenberg said, "While interest rates and overall housing affordability remain very favorable on a historic basis, the decline in the latest HOI is a positive development because it is another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace."

The most affordable major housing market in this year's second quarter was Youngstown-Warren-Boardman, Ohio-Pennsylvania where 93.4 percent of homes sold during the period were affordable to households earning the area's median family income of $55,700.  Also ranking among the most affordable major housing markets in respective order were Dayton, Ohio; Buffalo-Niagara Falls, New York; Indianapolis-Carmel, Indiana; and Modesto, California.

White Plains and New York City -Wayne, New Jersey remained the least affordable major housing market in the country for a 17th consecutive quarter, with just 29.4 percent of homes sold there being affordable to families earning the area's median income of $68,300.  Other relatively unaffordable areas were San Francisco-San Mateo-Redwood City; Bridgeport-Stamford-Norwalk, Connecticut; Santa Ana-Anaheim-Irvine, California; and Los Angeles-Long Beach-Glendale.

The HOI computes affordability using an area's median income during a specific quarter, the price of new and existing homes, and mortgage financing conditions including interest rates on fixed-and adjustable rate loans.