According to the latest National Association of Home Builders-Wells Fargo Housing Opportunity Index released this week, San Francisco, which has been the nation's least affordable housing market for nearly five years, was supplanted by Los Angeles in the third quarter of 2017.
In all, 58.3 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $68,000. This is down from the 59.4 percent of homes sold that were affordable to median-income earners in the second quarter.
"Though builder confidence remains strong, they continue to deal with the long-term repercussions of this devastating hurricane season, which has exacerbated chronic labor and lot shortages and put upward pressure on material and home prices," said NAHB Chairman Granger MacDonald.
"Solid economic growth, along with ongoing quarterly job gains and rising household formations, are fueling housing demand," said NAHB Chief Economist Robert Dietz. "Tight inventories and a forecast of rising mortgage interest rates through 2018 will keep home prices on a gradual upward path and slowly lessen housing affordability in the quarters ahead."
The national median home price rose to $260,000 in the third quarter from $256,000 in the second quarter of 2017. Meanwhile, average mortgage rates inched up two basis points in the third quarter to 4.1 percent from 4.08 percent in the second quarter.
For the fourth consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation's most affordable major housing market. There, 90.1 percent of all new and existing homes sold in the third quarter were affordable to families earning the area's median income of $54,600. Meanwhile, Wheeling, W.Va.-Ohio, was rated the nation's most affordable smaller market, with 94.7 percent of homes sold in the third quarter being affordable to families earning the median income of $56,100.
Rounding out the top five affordable major housing markets in respective order were Syracuse, N.Y.; Scranton-Wilkes Barre-Hazleton, Pa.; Indianapolis-Carmel-Anderson, Ind.; and Wilmington, Del.-Md.-N.J., which tied for the fifth spot with Cincinnati, Ohio-Ky.-Ind.
Smaller markets joining Wheeling at the top of the list included Lima, Ohio; Davenport-Moline-Rock Island, Iowa-Ill.; Bay City, Mich.; and Mansfield, Ohio, which also posted a fifth place tie with Binghamton, N.Y.
Los-Angeles-Long-Beach-Glendale, Calif., assumed the mantle as the nation's least affordable major housing market. There, just 9.1 percent of the homes sold during the third quarter were affordable to families earning the area's median income of $64,300. San Francisco-Redwood City-South San Francisco, Calif., which stood as the nation's least affordable major housing market for the past 19 consecutive quarters, fell to No. 2.
Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and Santa Rosa.
All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 11.3 percent of all new and existing homes sold were affordable to families earning the area's median income of $63,100.
In descending order, other small markets at the lowest end of the affordability scale included Santa Cruz-Watsonville; San Luis Obispo-Paso Robles-Arroyo Grande; Napa; and San Rafael.