Rockford, Illinois Most Affordable Housing Market in Second Quarter

August 30--Rockford, Ill., was the nation’s most affordable housing market in this year’s second quarter as higher interest rates took a significant toll on nationwide housing affordability, according to the National Association of Home Builders’ Housing Opportunity Index (HOI), released today.

The HOI is a quarterly measure of the percentage of homes sold that a family earning the median income can afford to buy. The HOI for April through June of 2000 ranked 173 metro areas on the basis of over 600,000 recorded home sales for a nationwide score of 58.4, down 4.4 points from the first quarter and the lowest score in nearly eight years.

"Families earning the median U.S. household income of $50,200 could afford to purchase 58.4 percent of homes sold nationwide during the second quarter of 2000," explained NAHB President Robert Mitchell, a home builder from Rockville, Md. "That compares to 62.8 percent of homes that were affordable in the previous quarter and 69.6 percent of homes that were affordable at the HOI’s peak in early 1999. This is the first time the HOI has dipped below 60 since mid-1992."

Mitchell attributed the decline primarily to the higher mortgage interest rates that prevailed in the second quarter. He pointed out that the national weighted average interest rate on adjustable and fixed rate mortgages, used to calculate the HOI, rose more than 20 basis points between the first and second quarters.

Families earning Rockford’s median income of $55,300 could afford to purchase 89.3 percent of homes sold there during the second quarter. The median price of homes sold in Rockford was $90,000.

San Francisco, where the median sale price was $510,000 in the second quarter, remained at the bottom of the affordability chart. A mere 5.9 percent of homes were affordable to families earning that

area’s median income of $74,900 in the April - June period.

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