With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).

In all, 63.6 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $75,500. This is up from the 60.9 percent of homes sold in the second quarter of 2019 that were affordable to median-income earners and slightly higher than a first quarter 2019 reading of 62.6.

The national median home price remained steady at $280,000 in the third quarter, flat from the previous quarter, but significantly higher than in the first quarter ($260,000). At the same time, average mortgage rates fell from 4.07 percent in the second quarter to 3.73 percent in the third quarter, reaching a three-year low*.

Scranton-Wilkes-Barre-Hazleton, Pa., was the nation’s most affordable major housing market. There, 89.3 percent of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $67,000.

Meanwhile, Monroe, Mich., was rated the nation’s most affordable smaller market, with 95.3 percent of homes sold in the third quarter being affordable to families earning the median income of $79,000.

San Francisco again ranked as the nation’s least affordable major market. There, just 8.4 percent of the homes sold in the third quarter of 2019 were affordable to families earning the area’s median income of $133,800.

All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 13.4 percent of all new and existing homes sold were affordable to families earning the area’s median income of $74,100.

Although lower mortgage rates have offset some of the increases in construction costs and improved affordability, builders’ ability to increase inventory remains severely constrained by a chronic labor shortage and excessive regulations.

* This quarter’s release incorporates the use of Freddie Mac’s 30-year fixed effective interest rates series, following the discontinuation in mid-2019 of the FHFA series previously used in HOI calculations. National and metropolitan area HOI numbers were revised back to the first quarter of 2012 using Freddie Mac’s interest rate series.

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