Home Affordability Increases in Fourth Quarter 2015

In the fourth quarter of 2015, home price and interest rate decreases caused a modest increase in nationwide housing affordability, according to the National Association of Home Builders.

Families earning the U.S. median income of $65,800 were able to afford 63.3 percent of new and existing homes sold in the fourth quarter, an increase from 62.2 percent in the third quarter.

"The signs point to continuing growth in home sales," said NAHB Chief Economist David Crowe in a statement. "We've seen an improvement in affordability due to favorable home prices and interest rates. Steady employment and economic growth, along with rising consumer confidence and pent-up demand will also help encourage more buyers to enter the marketplace."

The national median home price decreased to $226,000 in the fourth quarter from $231,000 in the third quarter, while average mortgage rates declined from 4.18 percent to 4.09 percent.

Youngstown-Warren-Boardman, Ohio-Pa., was the country’s most affordable major housing market, with 90.1 percent of all new and existing homes sold in the fourth quarter of 2015 affordable to families earning the area’s median income of $53,700.

The most affordable small housing market was Binghamton, N.Y., where 94.6 percent of homes sold were affordable to families making the area’s median income of $66,400.

The least affordable major housing market was San Francisco-San Mateo-Redwood City, Calif. Of the homes sold in the fourth quarter to families earning the area’s median income of $103,400, 10.4 percent were affordable.

The least affordable small housing market was Santa Cruz-Watsonville, Calif., where 16.3 percent of its homes sold to families earning the area’s median income of $87,000 were affordable.