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The average national mortgage rate dropped slightly in the third quarter of 2016, but homebuyers saw little in the way of improvement to housing affordability as median home prices continued to climb. As a result, housing became slightly less affordable in the third quarter, according to new data by the National Association of Home Builders (NAHB) released last week.

Just over 61 percent of new and existing homes sold in the third quarter were affordable to buyers that earned the national median income of $65,700 or greater. This was down from 62 percent recorded in the previous quarter, says NAHB’s Housing Opportunity Index.

Meanwhile, the national median home price rose to $247,000 in the third quarter, up from the $240,000 recorded the previous quarter. As median home prices rose, mortgage rates decreased to an average of 3.76 percent in the third quarter. This was down from the 3.88 percent recorded during the second quarter.

The country’s most affordable housing market in the third quarter was Fairbanks, Alaska. Nearly all the homes in Fairbanks were affordable with 97.7 percent of homes in the city affordable to buyers earning the area’s median annual income of $93,800. The median home price in Fairbanks was $236,000.

In the New York City metro area, only 35.8 percent of homes were affordable to buyers earning the annual median salary of $72,600 in the third quarter. The median home price was $420,000. The New York City metro area ranked 216th out of the 229 total metros studied based on affordability.

The remaining 13 metros that were less affordable than the New York City metro area were all located in California. San Francisco ranked as the least affordable metro in the third quarter, with only 9.7 percent of homes affordable to buyers earning the median annual income of $104,700 or greater. The median home price in San Francisco was $1.1 million.

Although affordability inched down in the third quarter, NAHB Chairman Ed Brady was optimistic about national home affordability. “Historically low interest rates and firming job growth are positive indicators that housing markets across the nation will continue to gradually improve,” he said.

Brady added that home prices continue to be affected by the rising costs of construction.

However, “attractive mortgage rates, rising incomes and growing household formations make this an excellent time to buy.”

Click here to read the entire report.

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