Last week, NAR released its latest quarterly metropolitan price and affordability figures. The lion’s share of metropolitan areas continued to experience strong year-over-year price growth in the fourth quarter. A companion metro area annual affordability report shows less favorable conditions, particularly in the West.
The median existing single-family home price increased in 73 percent of measured markets, with 119 out of 164 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2012.
NAR’s national annual Housing Affordability Index, with breakouts for metropolitan areas, fell to 175.8 in 2013 from a record high 196.5 in 2012. For first-time buyers making small downpayments, the affordability levels are relatively lower. The index is calculated on the relationship between median home price, median family income and average effective mortgage interest rate. The higher the index, the stronger household purchasing power; recordkeeping began in 1970.