Housing affordability is finality starting to improve—albeit incrementally, according to the Housing Opportunity Index released by the National Association of Home Builders [1] (NAHB) and Wells Fargo [2] on Thursday.
In the first quarter of 2017, 60.3 percent of all new and existing homes sold at a price affordable with the U.S. median income ($68,000). Only 59.9 percent of homes were affordable in Q4 of last year.
According to NAHB’s Eye on Housing blog [3], the slight uptick in affordability is likely due to wage growth and finally-steady home prices.
The most affordable major metros in the nation were Glen Falls, New York, and Youngstown-Warren-Boardman, Ohio-Pennsylvania, where nearly 93 percent of all homes sold in Q1 were affordable for the area’s median income of $64K and $54K, respectively. This marks the second consecutive quarter Youngstown has taken the top spot.
Of the country’s smaller cities, Kokomo, Indiana, came in as the most affordable market, with 96 percent of all Q1 homes sales deemed affordable. For the first quarter, the median income in Kokomo was $62,500 and the median sales price was $91,000.
In all, the top 10 most affordable markets in the country were largely concentrated in the North and Northeast. The list also included East Stroudsburg, Pennsylvania; Elgin, Illinois; Lansing-East Lansing, Michigan; Springfield, Ohio; Scranton-Wilkes Barre-Hazleton, Pennsylvania; Springfield, Illinois; and Canton-Massillon, Ohio.
On the opposite side of the spectrum, the San Francisco-Redwood City-South San Francisco, California, market was the least affordable in the country, with just under 12 percent of homes affordable to median-income earners. The metro has been the country’s least affordable for 18 quarters in a row.
A handful of other California metros also made the least affordable list, including Oakland-Hayward-Berkley, Santa Maria-Santa Barbara, San Rafael, San Luis Obispo-Paso Robles-Arroyo Grande, Oxnard-Thousand Oaks-Venture, Napa, Santa Rosa, San Diego-Carlsbad, San Jose-Sunnyvale-Santa Clara, Santa Cruz-Watsonville, Anaheim-Santa Ana-Irving, Salinas, and Los-Angeles-Long Beach-Glendale, where just 11.9 percent of homes were affordable.
The Index also showed the national median home price dropped for the quarter, falling from $250,000 to $245,000. At the same time, mortgage rates rose a half-point, increasing from 3.86 percent to 4.33 percent by the end of March.