Home prices are beginning to moderate, and national wages recently increased, helping to offset rising mortgage rates and buoy housing affordability in the first quarter of 2017, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Sixty percent of new and existing homes sold between the beginning of January and the end of March were affordable to families earning the U.S. median income of $68,000, according to the index. That is up slightly from 59.9 percent in the fourth quarter.
The national median home price dropped to $245,000 in the first quarter, down from $250,000 in the fourth quarter of 2016. Average mortgage rates, meanwhile, increased nearly a half point from 3.84 percent to 4.33 percent in the same time period.
“Ongoing job growth continues to fuel demand for housing,” says Robert Dietz, NAHB’s chief economist. “NAHB anticipates that housing will continue on a gradual, upward path throughout the year.”
For the second consecutive quarter, the nation’s most affordable major housing market remained Youngstown-Warren-Boardman, Ohio-Pa., where 92.7 percent of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $54,600. Among smaller markets, Kokomo, Ind., was the most affordable with 96.3 percent of homes affordable to families earning the median income of $62,500.
Meanwhile, San Francisco-Redwood City-South San Francisco, Calif., continued to be the least affordable major housing market, a title it’s carried for 18 consecutive quarters. Nearly 12 percent of homes sold there in the first quarter were affordable to families earning the area’s median income of $108,400.
Source: National Association of Home Builders
