With home prices decreasing and interest rates holding at historically low levels, the number of potential home buyers nationwide who can afford to buy new and existing homes has reached the highest level in more than four years, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

According to the third-quarter HOI readings, 56.1 percent of all new and existing homes that were sold were affordable to families earning the national median income of $61,500, far more than the 40.4 percent of families who could afford homes at the peak of the housing boom.

“If there is a silver lining to this crisis, it would be that some housing markets have become more affordable with a larger inventory to choose from,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va. “But this is undeniably a crisis and Congress needs to act on housing stimulus to get the market moving again.”

The two most affordable major housing markets in the country during the third quarter of the year were Indianapolis, Ind., and Youngstown, Ohio, according to the HOI. In both Indianapolis and Youngstown, 91 percent of homes sold in the third quarter were affordable to families earning the areas’ median household incomes of $65,100 and $52,000, respectively.  

Also near the top of the list for affordable major metropolitan areas were Grand Rapids-Wyoming, Mich.; Warren-Troy-Farmington Hills, Mich.; and Detroit-Livonia-Dearborn, Mich., in that order.

One smaller metro market (fewer than 500,000 people) outranked all others in terms of housing affordability during the third quarter of 2008 — Springfield, Ohio, where 92.9 percent of all homes sold in the period were affordable to families earning that area’s median household income of $54,500.

New York-White Plains-Wayne, N.Y.-N.J. was the nation’s least affordable major housing market for the second consecutive quarter. In the New York market, 10.6 percent of the new and existing homes sold during the third quarter were affordable to those earning the area’s median family income of $63,000.

Other major metro areas at the bottom of the housing affordability chart included San Francisco-San Mateo-Redwood City, Calif.; Nassau-Suffolk, N.Y.; Los Angeles-Long Beach-Glendale, Calif.; and Miami-Miami Beach- Kendall, Fla., in that order.

Among smaller metro areas, the other markets at the bottom of the affordability chart were San Luis Obispo-Paso Robles, Calif.; Santa Cruz-Watsonville, Calif.; Napa, Calif.; and Bend, Ore., respectively.

For tables, historic data and details, visit www.nahb.org.