Even as mortgage rates declined from the prior period, rising home prices brought affordability levels down in the third quarter, according to a measure released Thursday.
The National Association of Home Builders (NAHB) reported that 61.8 percent of new and existing homes sold from July through September were affordable to American households earning the median U.S. income of $63,900. That percentage was down from the 62.6 percent of homes sold that were affordable to median-income earners in the second quarter.
The drop in affordability was brought on by continuing increases in home prices, which rose to a median $221,000 from $214,000 in the previous months, NAHB reported. That was partially offset by a slight drop in interest rates, which averaged 4.35 percent.
Despite the ongoing decline in housing affordability, the group remains optimistic.
"Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards," said NAHB Chief Economist David Crowe. "Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year."
Youngstown-Warren-Boardman, Ohio-Pennsylvania, held on to its rank as the nation's most affordable major housing market last quarter. According to NAHB, 89.1 percent of all homes sold in the quarter were affordable to families earning the area's median income of $52,700.
Other major markets at the top of the affordability list included Syracuse, New York; Indianapolis-Carmel, Indiana; Harrisburg-Carlisle, Pennsylvania; and Dayton, Ohio.
At the other end of the spectrum, San Francisco-San Mateo-Redwood City, California, remained the least affordable major metro for the eighth straight quarter. Only 11.4 percent of homes sold in Q3 were affordable to families earning the area's median income of $100,400.