Housing Opportunity Index Shows Housing Affordability Edged Up in Fourth Quarter, 2014

(Jeff Sorg – OnlineEd) – According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released February 19, 2015, lower interest rates and home prices across the country contributed to a slight increase in nationwide housing affordability in the fourth quarter of 2014.

“This upturn in affordability for the final quarter of 2014 is a positive development and is in line with what we are hearing from builders in the field that more prospective buyers are starting to move forward in the marketplace,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.”

Some key highlights from this report include:

  • New and existing homes sold between the beginning of October and end of December were affordable to 62.8 percent of families earning the U.S. median income of $63,900, which is up from the 61.8 percent in the third quarter.
  • The national median home price declined from $220,800 in the third quarter to $215,000 in the fourth quarter.
  • Average mortgage interest rates decreased from 4.35 percent to 4.29 percent in the same period.

NAHB Chief Economist David Crowe says, “Affordable home prices, historically low mortgage rates and an improving job market will release pent-up demand and help keep the housing market moving forward in the year ahead.”

Other report highlights include:

  • Syracuse, NY earned the title of the nation’s most affordable major housing market, with 92.8 percent of all new and existing homes sold in the fourth quarter of 2014 being affordable to families earning the area’s median income of $67,700.
  • For a ninth quarter in a row the report shows San Francisco-San Mateo-Redwood City, CA earns the title of the nation’s least affordable major housing market with just 11.1 percent of homes sold in the fourth quarter affordable to families earning the area’s median income of $100,400.
  • Other major metros at the bottom of the affordability chart were Los Angeles-Long Beach-Glendale, CA; Santa Ana-Anaheim-Irvine, CA.; San Jose-Sunnyvale-Santa Clara, CA; and New York-White Plains-Wayne, NY.
  • Each of the five least affordable small housing markets were in California. At the very bottom was Napa, where only 12 percent of all new and existing homes sold were affordable to families earning the area’s median income of $70,300. Other small markets included Santa Cruz-Watsonville, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles; in descending order.

For tables, historic data and other details, please visit:  nahb.org/hoi.

The NAHB/Wells Fargo Housing Opportunity Index (HOI) is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Agency.

The NAHB/Wells Fargo HOI is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public.

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  This article was published on February 19, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Jeff Sorg

About the Author

Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center's CDEi Designation for distance education in 2008. OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.