Lower mortgage interest rates and favorable prices translated into a slight increase in housing affordability in the first quarter.
According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), 65% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,700. In the fourth quarter, 63.3% of homes sold were affordable to median-income earners.
The national median home price fell from $226,000 in the fourth quarter to $223,000 in the first three months of 2016. The median is the point at which half the prices were higher and half were lower. At the same time, average mortgage rates edged lower -- from 4.09% to 4.05%.
“With interest rates near historic lows and attractive home prices, this is a great time to buy a home,” said NAHB Chairman Ed Brady.
Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation’s most affordable major housing market for the second consecutive quarter. More than 93% of all new and existing homes sold there in the first quarter were affordable to families earning the area’s median income of $53,900.
Rounding out the top five affordable major housing markets in respective order were Syracuse, N.Y.; Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes-Barre-Hazleton, Pa.; and Toledo, Ohio.
Cumberland, Md.-W.Va., claimed the title of most affordable small housing market in the first quarter of 2016. There, 98% of homes sold during the first quarter were affordable to families earning the area’s median income of $55,100.
Smaller markets joining Cumberland at the top of the list included Wheeling, W.Va.-Ohio; Fairbanks, Alaska; Binghamton, N.Y.; and Davenport-Moline-Rock Island, Iowa-Ill.
Nearly out of reach
For the 14th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 10.4% of homes sold in the first quarter were affordable to families earning the area’s median income of $96,800.
Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.
Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, Calif., where 16.1% of all new and existing homes sold were affordable to families earning the area’s median income of $85,100.
Other small markets at the lowest end of the affordability scale included Salinas, Calif.; Napa, Calif; San Luis Obispo-Paso Robles-Arroyo Grande, Calif.; and Kahului-Wailuku-Lahaina, Hawaii.
“This is the second consecutive quarter that we’ve seen a nationwide improvement in affordability due to favorable home prices and mortgage rates,” said NAHB Chief Economist Robert Dietz. “These factors, along with rising employment, a growing economy and pent-up demand will provide a boost for home sales in the second half of 2016.”
Initial applications for state unemployment benefits were on the rise last week.
The Department of Labor (DOL) reports first-time jobless claims jumped by 20,000 in the week ending May 7 to a seasonally adjusted 294,000, an increase of 20,000. While that's the highest level since February 28, 2015, the claims level has been under 300,000 for 62 weeks in a row, the longest streak since 1973.
The four-week moving average, considered a more active gauge of the labor market because of its low volatility, came in at 268,250, up 10,250 from the week before.
The full report may be found on the DOL website