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National Housing Affordability Increased in the Fourth Quarter of 2012

According to the National Association of Home Builders (NAHB) and Wells Fargo Opportunity Index (HOI), the fourth quarter of 2012 revealed a slight gain in nationwide housing affordability due to substantially low interest rates.  The 74.9 percent of homes sold between October and December were sold to families earning a median income of $65,000.  This was an increase of one percent over the 74.1 percent of homes that were affordable to median-income families in the third quarter of last year.

NAHB chairman, Rick Judson said, “The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path.”  He also confirmed that 259 out of 361 metro areas are improving based on a recent reading of the NAHB/First American Improving Markets Index.

NAHB chief economist David Crowe said, “The median price of all new and existing homes sold in the fourth quarter of 2012 was $188,000, essentially unchanged from the previous quarter’s $189,000 that marked a nearly three-year high.  “It is noteworthy that affordability remains historically high thanks to favorable mortgage rates even as national home price indexes show some rise in values.”

At the end of 2012, the nation’s second most affordable major housing market was held by Ogden-Clearfield, Utah.  The area’s median household income increased to $71,500, which was up 93.7 percent from 93.2 percent of homes sold in the third quarter of to median-income households.

Dayton, Ohio; Indianapolis-Carmel, Indiana; Lakeland-Winter Haven, Florida; and Syracuse, New York also ranked among the most affordable major housing markets.

Fairbanks, Alaska remained at the top of affordability among the smaller housing markets, with almost all the homes sold in the fourth quarter.  The median household income was $92,900 and totaled a 99.6 percent.  Cumberland, Maryland; Springfield, Ohio; Monroe, Michigan; and Mansfield, Ohio are also at the top of the small housing market index.

At the bottom of the affordability chart remained the tri-county cities – New York, New York; White-Plains, New York, and Wayne, New Jersey – which switched places with San Francisco, San Mateo, and Redwood City, California.  The NY-NJ tri-county metropolitan area held the lowest spot for affordable housing for 18 consecutive months prior to last year.  In San Francisco, only 28.4 percent of the homes sold were affordable to families earning the area’s median income of $103,000.


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