Housing affordability held steady in the final three months of last year as median prices dipped and mortgage rates rose only slightly, a good sign for the sector’s recovery, according to an index released Thursday.
Overall, 64.7 percent of new and existing homes sold between October and December were affordable to families earning the U.S. median income of $64,400, slightly higher than the 64.5 percent in the third quarter, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
"Housing affordability is stabilizing at a time when pent-up demand and ongoing job growth are helping housing markets across the nation to gradually strengthen," said NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Del.
"While this bodes well for housing in 2014, builders continue to face challenges, including tight credit for home buyers, inaccurate appraisals and a shortage of workers and buildable lots."
Youngstown-Warren-Boardman, Ohio-Pa. was the nation's most affordable major housing market, with 89.4 percent of all new and existing homes in the range for families earning the areas' median incomes of $53,900.
Meanwhile, Kokomo, Ind., was the most affordable smaller market, with 96.3 percent of homes sold in the fourth quarter being affordable to those earning the median income of $60,100.
Other major U.S. housing markets at the top of the affordability chart included Harrisburg-Carlisle, Pa.; Syracuse, N.Y.; Buffalo-Niagara Falls, N.Y.; and Scranton-Wilkes-Barre, Pa.
Smaller markets joining Kokomo included Springfield, Ohio; Monroe, Mich.; Vineland-Millville-Bridgeton, N.J.; and Cumberland, Md.-W.Va.
For a fifth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif., remained at the bottom of the affordability chart among major markets, where just 14.1 percent of homes sold were affordable to those earning the area's median income of $101,200.
Other major metros at the bottom of the affordability chart included Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara.
All of the five least affordable small housing markets were in California.
At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 18.6 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 Salinas, San Luis Obispo-Paso Robles, Napa and Santa Rosa-Petaluma, respectively.