Rising home prices and interest rates contributed to lower housing affordability in the third quarter, according to the National Association of Home Builder/Wells Fargo Housing Opportunity Index (HOI).
Of the new and existing homes sold between the beginning of July and the end of September, 64.5 percent were affordable to families earning the U.S. median income of $64,400. This is down from 96.3 percent of homes in the second quarter and marks the biggest decline since 2004.
"The decline in affordability is the result of higher mortgage rates and the more than year-long steady increase in home prices," NAHB Chief Economist David Crowe said in a statement. "While affordability has come down from the peak in early 2012, the index still means a family earning a median income can afford 65 percent of homes recently sold. Some of the decline in the affordability index could be the result of a loss in some more modest priced home sales as tight underwriting standards have limited the purchases by moderate income families."
Indianapolis-Carmel, Ind., and Syracuse, N.Y. were tied as the nation's most affordable major housing markets in the third quarter, and for the fourth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. held the lowest spot among major markets on the affordability chart.
The full list is available here.
