Housing affordability suffered its biggest hit in nearly ten years during the third quarter of 2013 the National Association of Homebuilders (NAHB) and Wells Fargo said today.  Their Housing Opportunity Index (HOI) for the quarter was 64.5 percent, down from 69.3 percent in the second quarter.  This means that 64.5 percent of new and existing homes sold in the U.S. between the beginning of July and end of September were affordable to families earning the U.S. median income of $64,400.

 "Housing affordability is being negatively affected by a 'perfect storm' scenario," observed NAHB Chairman Rick Judson.  "With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor."    
"The decline in affordability is the result of higher mortgage rates and the more than year-long steady increase in home prices," observed NAHB Chief Economist David Crowe. "While affordability has come down from the peak in early 2012, the index still means a family earning a median income can afford 65 percent of homes recently sold.  Some of the decline in the affordability index could be the result of a loss in some more modest priced home sales as tight underwriting standards have limited the purchases by moderate income families."

The most affordable major housing markets were Indianapolis-Carmel, Indiana, and Syracuse, New York which tied with 93.3 percent of all new and existing homes being affordable to families earning the areas' median incomes of $65,100 and $65,800 respectively. Meanwhile, Kokomo, Indiana was the most affordable smaller market, with 96.9 percent of homes sold in the third quarter affordable to those earning the median income of $60,100.

Other affordable major housing markets in descending order were Youngstown-Warren-Boardman, Ohio-Pennsylvania.; Harrisburg-Carlisle, Pennsylvania; and Buffalo-Niagara Falls, New York.

Following Kokomo in smaller market affordability were Vineland-Millville-Bridgeton, New Jersey; Davenport-Moline-Rock Island, Iowa-Illinois; and Bay City, Michigan.

For a fourth consecutive quarter, San Francisco-San Mateo-Redwood City was the least affordable major market.  Only 16 percent of homes sold in the third quarter were affordable to families earning the area's median income of $101,200.  Other least affordable major markets were Los Angeles-Long Beach-Glendale; Santa Ana-Anaheim-Irvine; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara, California.

All of the five least affordable small housing markets were in California. In Santa Cruz-Watsonville 20.3 percent of all new and existing homes sold were affordable to families with incomes of $73,800. Other small markets at the lowest end of the affordability scale included San Luis Obispo-Paso Robles, Santa Rosa-Petaluma, Napa and Salinas.