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Homebuilder Confidence Rises 6 Points for July

The National Association of Home Builders/Wells Fargo Housing Market Index showed builder confidence in the single-family housing market reached its highest level in nearly a decade in July. According to the report, the index increased six points to a reading of 35 during the month, indicating sentiment in the new-home sector is strong.

Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved.

The rise in confidence, along with record low mortgage rates and favorable home prices, the market for home buying is in great shape and could potentially lead to a recovery.

The index also showed positive signs for future sales, as the component measuring that figure increased 11 points.

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Cities Where Paychecks Stretch the Furthest

When we think of places with high salaries, big metro areas like New York, Los Angeles or San Francisco are usually the first to spring to mind. But wages are just one part of the equation: High prices in those East and West Coast cities mean the fat paychecks aren’t necessarily getting the locals ahead. When cost of living is factored in, most of the places that boast the highest effective pay turn out to be in the less celebrated and less expensive middle part of the country.

No. 1: Houston

In first place is Houston, where the average annual wage in 2011 was $59,838, eighth highest in the nation. What puts Houston at the top of the list is the region’s relatively low cost of living, which includes such things as consumer prices and services, utilities and transportation costs and, most important, housing prices: The ratio of the median home price to median annual household income in Houston is only 2.9, remarkably low for such a dynamic urban region; in San Francisco a house goes for 6.7 times the median local household income. Adjusted for cost of living, the average Houston wage of $59,838 is worth $66,933, tops in the nation.

No. 2: Silicon Valley

Only two expensive metro areas made the top 10 list. One is Silicon Valley (San Jose-Sunnyvale-Santa Clara), where the average annual wage last year of $92,556, the highest in the nation, makes up for its high costs, which includes the worst housing affordability among the 51 metro areas we considered: housing prices are nearly 7 times the local median income. Adjusted for cost of living, that $92,556 paycheck is worth $61,581, placing the Valley second on our list.

No. 3: Detroit area

One major surprise is the metro area in third place: Detroit-Warren-Livonia, Mich. This can be explained by the relatively high wages paid in the resurgent auto industry and, as reported earlier, a huge surge in well-paying STEM (science, technology, engineering and math-related) jobs. Combine this with some of the most affordable housing in the nation and sizable reductions in unemployment — down 5% in Michigan over the past two years, the largest such drop in the nation.

The rest

Most of the rest of the top 10 are relatively buoyant economies with relatively low costs of living. These include Memphis (fourth), Dallas-Fort Worth (fifth), Charlotte, N.C. (sixth), Cincinnati (seventh), Austin, Texas (eighth), and Columbus, Ohio (10th). These areas all also have housing affordability rates below 3.0 except for Austin, which clocks in at 3.5. Similar situations down the list include such mid-sized cities as Nashville (11th), St. Louis (12th), Pittsburgh (13th), Denver (15th) and New Orleans (16th).

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