Home affordability declines as prices increase
As residential home prices continue to experience improvements, home affordability has taken a hit, according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Opportunity Index showed that 73.8 percent of homes sold in the second quarter were affordable for families earning $65,000 a year, down from 77.5 percent in the previous quarter – a record high.
“While interest rates and overall housing affordability remain very favorable on a historic basis, the decline in the latest HOI is a positive development because it is another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace,” said NAHB chairman Barry Rutenberg.
The New York-White Plains-Wayne, New York-New Jersey area remained the least affordable market with just 29.4 percent of homes sold affordable for the median income in the area.
According to the National Association of Realtors, home prices in the New York metro area remained high in the second quarter despite a slight decline. The median price decreased 4.2 percent on a year-over-year basis to $429,000.