Short List

The Affordability Trifecta

A slight decrease in interest rates and lower median home prices gave housing affordability a slight boost in the fourth quarter of 2014, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index.

The Index showed that 62.8 percent of new and existing homes sold between the beginning of October and end of December last year were affordable to families who earn the U.S. median income of $63,900. That’s an increase from the 61.8 percent recorded in the third quarter of 2014. The national median home price declined 2.63 percent in the fourth quarter, from $220,800 to $215,000. Meanwhile, average mortgage interest rates declined from 4.35 percent to 4.29 percent in the same period.

“Affordable home prices, historically low mortgage rates and an improving job market will release pent-up demand and help keep the housing market moving forward in the year ahead,” NAHB Chief Economist David Crowe says.