Nationwide housing affordability slipped slightly as recovering markets witnessed significant firming of home prices in the second quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

In all, 69.3 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 $64,400. This is down from the 73.7 percent of homes sold that were affordable to median-income earners in the first quarter, and the first time that the measure has fallen below 70 percent since late 2008.

The HOI is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Agency.

Rising home prices are a signal of the improving health in housing markets. The median price of all new and existing U.S. homes sold in this year’s second quarter, $202,000, was well ahead of the second quarter 2012 median price of $185,000. Along with rising mortgage rates, this rise in price contributed to affordability slipping to the lowest level in more than four years.

Ogden-Clearfield, Utah, was rated the nation’s most affordable major housing market for a fourth consecutive quarter. 92.8 percent of all new and existing homes sold in this year’s second quarter were affordable to families earning the area’s median income of $70,800. This was slightly lower than the 93.4 percent of homes sold that were affordable to median income-earners in the previous quarter.

A newcomer – Utica-Rome, N.Y. – claimed the title of most affordable smaller market. Just over 97 percent of new
and existing homes sold in Utica-Rome in the same period were affordable to families earning that area’s median income of $63,800.

Other major U.S. housing markets at the top of the affordability chart in the second quarter included Indianapolis-Carmel, Ind.; Harrisburg-Carlisle, Pa.; Youngstown-Warren-Boardman, Ohio-Pa.; and Buffalo-Niagara Falls, N.Y., in descending order.

Smaller markets joining Utica at the top of the affordability chart included Kokomo, Ind.; Cumberland, Md.-W.V.; Vineland-Millville-Bridgeton, N.J.; and Bay City, Mich.

For a third consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. held the lowest spot among major markets on the affordability chart. There, just 19.3 percent of homes sold in the second quarter were affordable to families earning the area’s median income of $101,200.

Other major metros at the bottom of the affordability chart included Los Angeles-Long Beach-Glendale, Calif.; Santa Ana-Anaheim-Irvine, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara, Calif.; in descending order.

All of the least affordable small housing markets were in California in the latest quarter. At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 30 percent of all new and existing homes sold were affordable to families earning the area’s median income of $73,800. Other small markets at the lowest end of the affordability scale included San Luis Obispo-Paso Robles, Salinas, Napa and Santa Rosa-Petaluma, respectively.

The complete tables, details, and historic data are available at www.nahb.org/hoi.

Tags: economics, hoi, housing