Rising Home Prices Affect Housing Affordability in the Second Quarter

Solid home price appreciation more than offset a modest reduction in mortgage interest rates to push housing affordability lower in the second quarter of 2016, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

In all, 62 percent of new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $65,700. This is down from the 65 percent of homes sold that were affordable to median-income earners in the first quarter.

HOI PPT Q216

The national median home price increased from $223,000 in the first quarter to $240,000 in the second quarter. Meanwhile, average mortgage rates edged lower from 4.05 percent to 3.88 percent in the same period.

For the third consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa. was rated the nation’s most affordable major housing market. There, 91.1 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $53,900.

Meanwhile, Kokomo, Ind. claimed the title of most affordable small housing market in the second quarter of 2016. There, 98.2 percent of homes sold during the second quarter were affordable to families earning the area’s median income of $60,900.

For the 15th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif. was the nation’s least affordable major housing market. There, just 8.5 percent of homes sold in the second quarter were affordable to families earning the area’s median income of $104,700.

The five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 14.7 percent of all new and existing homes sold were affordable to families earning the area’s median income of $85,100.

Visit nahb.org/hoi  for tables, historic data and details.



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