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Economy in Brief

U.S. Home Affordability Declines
by Tom Moeller  August 8, 2018

The National Association of Realtors reported that the Composite Index of Home Affordability declined 8.8% y/y during June to 134.8, the lowest level since August 2008. The index was 37.3% below its peak in January 2013.

Together, principal & interest payments rose to $1,164 or 18.5% of median income, the highest percentage since August 2008. That percentage compared to a low of 11.6% early in 2013. Higher prices helped reduced affordability. The median sales price of an existing home strengthened 5.2% y/y to $279,300. The price rise was accompanied by a higher average mortgage rate of 4.74%, up from a 3.43% low in December 2012.  Growth in median family income slowed to 2.9% y/y in June from 3.3% last year and 4.1% during all of 2016.

The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter the home-buying market. Data on Home Affordability can be found in Haver's REALTOR database. Interest rate data can be found in the WEEKLY and DAILY databases.

Housing Affordability Jun May Apr Jun Y/Y 2017 2016 2015
Composite Index 134.8 140.7 145.4 -8.8% 158.2 168.5 168.0
  Payment as a Percent of Income 18.5 17.8 17.2 16.9 15.8 14.9 14.9
  Principal and Interest Payment $1,164 $1,112 $1,073 12.9% $967 $880 $849
  Median Sales Price (Existing Single Family Home) $279,300 $267,800 $259,900 5.2% $247,508 $233,642s $221,350
  Monthly Mortgage Rate   4.74% 4.71% 4.66% 4.14% 4.20% 3.88% 4.03%
  Median Family Income $75,312 $75,101 $74,906 2.9% $73,409 $71,062 $68,260
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