Buying a house was more expensive during the spring, with rising prices offsetting drops in mortgage rates.
Housing affordability dropped slightly, to 59.4 percent for new and existing homes sold during the April-June quarter for families earning the U.S. median income of $68,000, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index released on Thursday.
{mosads}That was a drop from 60.3 percent of purchased homes that were affordable to median-income earners during the first three months of the year.
“The job market continues to gain steam, and this is boosting housing demand,” said Robert Dietz, NAHB chief economist.
“Meanwhile, growing incomes and attractive mortgage rates are helping to keep housing affordable by partially offsetting ongoing home price appreciation,” Dietz said.
Home prices will likely continue to rise while there is a shortage of homes for sale.
The national median home price rose to $256,000 in the second quarter from $245,000 in the January-March period.
During that time, average mortgage rates fell one-quarter of a point in the spring to 4.08 percent from 4.33 percent in the first quarter.
“While builder confidence remains solid and sales and starts are running at a healthy clip above last year’s levels, housing continues to confront persistent headwinds,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
“Rising material prices, particularly lumber, along with chronic shortages of buildable lots and skilled labor are putting upward pressure on home prices and impeding a more robust housing recovery,” MacDonald said.
For the third consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa., was the nation’s most affordable major housing market where 93.3 percent of all homes sold in the second quarter were affordable to families earning the area’s median income of $54,600.
Meanwhile, Kokomo, Ind., was rated the nation’s most affordable smaller market for the second straight quarter, with 96.9 percent of homes sold affordable to families earning $62,500.
Rounding out the top five affordable major housing markets were Syracuse, N.Y.; Dayton, Ohio; Buffalo-Cheektowaga-Niagara Falls, N.Y.; and Scranton-Wilkes Barre-Hazleton, Pa.
Smaller markets joining Kokomo at the top of the list included Davenport-Moline-Rock Island, Iowa-Ill.; Glen Falls, N.Y.; Watertown-Fort Drum, N.Y.; and Monroe, Mich.
For the 19th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. Only 7.6 percent of homes sold in the second quarter were affordable to families earning the region’s median income of $113,100.
Other major metros at the bottom of the affordability chart were located in California — Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and Santa Rosa.
All five least-affordable small-housing markets were in California.
At the bottom of the affordability scale was Salinas, where only 12.4 percent of all homes sold were affordable to those making the median income of $63,100.