By Vicki Needham - 05/13/14 01:53 PM EDT
A slight drop in median home prices and steady mortgage rates boosted housing affordability during the first three months of the year, another good sign for the sector's recovery.
The National Association of Home Builders (NAHB) said Tuesday that 65.5 percent of new and existing homes sold in the January through March period were affordable to families earning the nation's median income of $63,900.
Meanwhile, the national median home price dipped to $195,000 in the first quarter from $205,000 in the final three months of last year, while average mortgage interest rates remained steady, moving to 4.57 percent from 4.54 percent in the same period.
"Housing affordability remains strong and this is an encouraging sign as the spring home building season moves into high gear," said NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Del.
Syracuse, N.Y., was the nation's most affordable major housing market, with 93.7 percent of all homes affordable to families earning the area's median income of $67,700.
In smaller markets, Cumberland, Md-W.Va., was most affordable, with 96.3 percent of homes sold in the first quarter being affordable to those earning the median income of $54,100.
"As home prices and mortgage interest rates are unlikely to go down, the first quarter HOI is another indicator that this is an opportune time to buy," said David Crowe, NAHB's chief economist.
Other major U.S. housing markets at the top of the affordability chart in the first quarter included Buffalo-Niagara Falls, N.Y.; Youngstown-Warren-Boardman, Ohio-Pa.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio.
Smaller markets joining Cumberland were Springfield, Ohio; Kokomo, Ind.; Mansfield, Ohio; and Lima, Ohio.
For a sixth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif., held the lowest spot among major markets on the affordability chart.
There, only 13.3 percent of homes sold in the first quarter were affordable to families earning the area's median income of $100,400.
Other major metro areas at the bottom of the affordability chart included Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara, Calif.