Home affordability fell slightly in the third quarter

Housing affordability dipped slightly in the July-September period, as home prices firmed up, while the market builds up some steam, a new index showed Thursday. 

The National Association of Home Builders said 61.8 percent of new and existing homes sold between the third quarter were affordable to families earning the U.S. median income of $63,900. 

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"Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards," said David Crowe, NAHB's chief economist.

"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."

This is down from the 62.6 percent of homes in the April-June period, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI).

The national median home price increased to $221,000 in the third quarter, up from $214,000 in the second.

Meanwhile, average mortgage interest rates decreased to 4.35 percent from 4.44 percent in the same period.

"Low mortgage rates, strong job growth and affordable home prices make this a good time to buy a home," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

Youngstown-Warren-Boardman, Ohio-Pa. was the nation's most affordable major housing market, as 89.1 percent of all new and existing homes sold were affordable to families earning the area's median income of $52,700.

Meanwhile, Cumberland, Md.-W.Va. and Kokomo, Ind. each tied as the most affordable smaller market, with 94.8 percent of homes sold in the third quarter being affordable to those earning the median income of $54,100 in Cumberland and $56,900 in Kokomo.

Other major U.S. housing markets at the top of the affordability chart in the third quarter included Syracuse, N.Y.; Indianapolis-Carmel, Ind.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio.

Meanwhile, smaller markets joining Cumberland and Kokomo at the top of the affordability chart included Davenport-Moline-Rock Island, Iowa-Ill.; Mansfield, Ohio; and Springfield, Ohio.

For an eighth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. was the nation's least affordable major housing market.

In that area only 11.4 percent of homes sold in the third quarter were affordable to families earning the area's median income of $100,400.

Other major metros at the bottom of the affordability chart were Los Angeles-Long Beach-Glendale, Calif.; Santa Ana-Anaheim-Irvine, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and New York-White Plains-Wayne, N.Y.-N.J.