A decrease in median home prices coupled with steady mortgage rates helped contribute to higher housing affordability in the first quarter of 2014, according to the National Association of Home Builders (NAHB). NAHB, coupled with Wells Fargo, recently published their Housing Opportunity Index (HOI), which found 65.5 percent of new and existing homes sold between January through March were affordable to families.
Affordability figures were based on the U.S. median income of $63,900. The figure from the first quarter was slightly higher than the 64.7 percent of homes sold that were considered affordable in the fourth quarter of last year.
"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.
The national median home price dropped from $205,000 to $195,000 in Q1. Average mortgage rates remained relatively stable, moving from 4.54 percent to 4.57 percent in the same period.
"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 NAHB chief economist, David Crowe.
On a local level, Syracuse, New York was the nation's most affordable major housing market with 93.7 percent of all new and existing homes affordable to the national median income.
Other major U.S. housing markets at the top of the affordability chart in the first quarter include Buffalo-Niagara Falls, New York; Youngstown-Warren-Boardman, Ohio/Pennsylvania; Harrisburg-Carlisle, Pennsylvania; and Dayton, Ohio.
For a sixth consecutive quarter, San Francisco-San Mateo-Redwood City, California held the top spot among the least affordable metros. A mere 13.3 percent of homes sold in the first quarter were affordable to families earning the area's median income of $100,400, much higher than the national average.
Other major metros at the bottom of the affordability chart included Santa Ana-Anaheim-Irvine, California; Los Angeles-Long Beach-Glendale, California; New York-White Plains-Wayne, New York/New Jersey; and San Jose-Sunnyvale-Santa Clara, California.