Low mortgage rates seen throughout 2012 are credited with boosting home prices, while home sales were able to rise thanks to a lower inventory of homes. The most recent Housing Opportunity Index from the National Association of Home Builders/Wells Fargo revealed the final quarter provided additional affordability while prices stayed strong despite the slower season for real estate activity.
Data from the report showed 74.9 percent of homes sold in the last quarter of the year were considered affordable to families who earned the national median income of $65,000. This was a slight improvement from the 74.1 percent of properties deemed affordable in the third quarter.
The median price of both new and existing homes sold in the fourth quarter of 2012 was $188,000, just $1,000 less than the median from the previous quarter when prices reached their highest level in three years. Despite the rise in prices, buyers have been taking advantage of rates that have lingered near record lows set throughout last year, which helped improve values and contributed to overall improvements. While rising prices may not seem ideal for first-time buyers or those who are looking to make the investment for less, buying in a health market is crucial.
"The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path," said Rick Judson, NAHB Chairman.
Some parts of the country have been considerably more affordable than others, including Ogden-Clearfield, Utah, which has been highlighted as NAHB's most affordable major housing market for two consecutive quarters. Property data revealed that 93.7 percent of all new and existing homes were considered affordable, a gain from the 93.2 percent recorded in the third quarter of 2012.
Other areas that have been noted as the most affordable major markets included Dayton, Ohio; Indianapolis-Carmel, Indiana; Lakeland-Winter Haven, Florida and Syracuse, New York.
Judson also noted that in a separate report, NAHB found that 259 of the 361 metros monitored for the Improving Markets Index were considered on the rise, with every state being represented in addition to the District of Columbia