Housing affordability fell slightly in the third quarter amid modest home price and interest rate increases, a new report showed on Thursday.
In the July-September period, 62.2 percent of new and existing homes sold were affordable to families earning the U.S. median income of $65,800, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index.
{mosads}That is down from 63.2 percent in the April-June quarter.
“The decline in the index was slight, and affordability remains good,” said David Crowe, NAHB’s chief economist. “With mortgage rates near historic lows and home prices advancing at a modest pace, this is an excellent time to buy.”
The national median home price increased slightly to $231,000 from $230,000.
Meanwhile, average mortgage rates edged higher, to 4.18 percent from 3.99 percent, in the same period.
“Attractive home prices and interest rates, along with firming job growth, are helping housing markets across the country to gradually improve,” said NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Mo.
“While this bodes well for housing in the coming year, builders continue to face challenges, including a lack of available lots and skilled labor,” Woods said.
Syracuse, N.Y., was the nation’s most affordable major housing market, with 91.7 percent of all homes affordable to families earning the area’s median income of $68,500.
Rounding out the top five affordable major housing markets were Harrisburg-Carlisle, Pa.; Indianapolis-Carmel, Ind.; and Scranton-Wilkes-Barre, Pa.
Meanwhile, Glens Falls, N.Y., was the most affordable small housing market.
For the 12th consecutive quarter, San Francisco-San Mateo-Redwood City, Calif., was the nation’s least affordable major housing market.
Other major metros at the bottom of the affordability chart were located in California.
In descending order, they were Los Angeles-Long Beach-Glendale.; Santa Ana-Anaheim-Irvine.; San Jose-Sunnyvale-Santa Clara.; and Santa Rosa-Petaluma.