Home prices "firmed" in several markets in the second quarter and, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), affordability dipped accordingly.  The Index, a measure of the percentage of homes sold during the quarter that were affordable to families earning the U.S. median income, declined from 65.5 percent in the first quarter to 62.6 percent in the second.

The U.S. median income in the second quarter was $63,900 and a median priced come cost $214,000 compared to $195,000 in the previous quarter.  Interest rates, another factor in affordability, compensated a bit for the rising home prices, decreasing by an average of 13 basis points to 4.44 percent.

"The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom," said NAHB Chief Economist David Crowe. "While we are seeing a slight decrease in affordability, it is still fairly high by historical standards."

The major metropolitan statistical area (MSA) that was most affordable in the second quarter was Youngstown-Warren-Boardman, Ohio-Pennsylvania.  A family earning the area's median income of $52,700 could theoretically afford to purchase 90.4 percent of all new and existing homes sold in that market in the second quarter.  Other affordable major markets were Indianapolis, Syracuse, Harrisburg-Carlisle, and Scranton-Wilkes-Barre.

The most affordable small market was Cumberland, Maryland where 97.2 percent of homes sold in the second quarter were affordable to those earning the median income of $54,100.  Following Cumberland in descending order of affordability were Kokomo, Indiana; Davenport, Iowa-Rock Island, Illinois; Battle Creek, and Lima, Ohio.

At the other extreme, only 11.1 percent of homes sold in the San Francisco-San Mateo-Redwood City MSA were affordable to families earning the median income of $100,400.  It was the seventh straight quarter the area has topped the least affordable list.  It was followed by Santa Ana-Anaheim-Irvine; Los Angeles-Long Beach; San Jose-Sunnyvale-Santa Clara; and New York-White Plains-Wayne, New Jersey.

All five least affordable small housing markets were in California. At the very bottom was Santa Cruz-Watsonville, where 16.6 percent of all new and existing homes sold were affordable to families earning the area's median income of $77,900. Other small markets included Napa, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles.