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