Indianapolis: Most affordable U.S. housing market

NEW YORK (CNNMoney.com) -- Indianapolis led all U.S. cities in housing affordability during the third quarter, according to a survey released Monday by Wells Fargo and the National Association of Home Builders (NAHB).

It was the fifth straight quarter that Indianapolis was the most affordable major housing market in the United States.

Nationally, according to NAHB President David Pressly, 40.4 percent of all new and existing homes sold during the third quarter were affordable to families earning the median U.S. income of $59,600. That means more than half the nation had too little income to buy a median priced home.

The NAHB/Wells Fargo Housing Opportunity Index measures the percentage of homes sold in a given area that are affordable to families earning that area's median income. To be deemed affordable, housing expenses must be no more than 28 percent of income. Expenses include property taxes and insurance as well as the mortgage payment.

Overall affordability changed little from the second quarter as higher mortgage rates offset slightly lower home prices and rising household income.

In Indianapolis, nearly In Indianapolis, 86 percent of the homes sold came in at or below what someone earning the city's median household income ($65,100) could afford to buy.

In contrast, only 1.8 percent of all homes sold in Los Angeles were affordable to those earning $56,200, the median household income there.

Among large cities, northern industrial metro areas dominated the most affordable list with Youngstown-Warren-Boardman, Ohio-Pennsylvania, Detroit-Livonia-Dearborn, Michigan, Buffalo-Niagara Falls, New York and Grand Rapids-Wyoming, Michigan all near the top.

Small cities that were big in affordability included Springfield, Ohio, Mansfield, Ohio, Lansing-East Lansing, Michigan, Lima, Ohio, Battle Creek, Michigan and Canton-Massillon, Ohio

California monopolized the bottom of the list with Santa Ana-Anaheim-Irvine, Modesto, Stockton, and San Diego-Carlsbad-San Marcos the least affordable big cities. Small unaffordable places included Salinas, Merced, Madera, Napa, and Santa Barbara-Santa Maria.

• Home prices edged lower in the third quarter.

• Foreclosures have trended sharply up.

• Housing starts have hit a six-year low.