Global| Feb 11 2014U.S. Home Affordability Deteriorates in 2013
by:Tom Moeller
|in:Economy in Brief
Summary
The National Association of Realtors reported that during all of last year its Housing Affordability Composite Index declined to 178.6, the lowest level since 2010. For December, the index slipped further to 168.1 from 170.90 during [...]
The National Association of Realtors reported that during all of last year its Housing Affordability Composite Index declined to 178.6, the lowest level since 2010. For December, the index slipped further to 168.1 from 170.90 during November. The Affordability Index reached a peak of 213.6 in January when average mortgage interest rates were at their low of 3.4%.
The decline in affordability last year reflected a rise in the average mortgage rate to 4.00%, then a further increase by December to 4.41%. Also, the median sales price increased 11.5% for the full year to $195,950. The latest price of $197,900 was, however, down from the June peak of $214,600. Median family income rose during December to $64,081, up 1.7% y/y. For the full year income rose 2.5% to $63,623. Higher rates combined with improved home prices to raise the monthly mortgage payment to 14.1% of income for all of last year and to 14.9% by yearend.
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 | Dec | Nov | Oct | Dec Y/Y | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Composite Index | 168.1 | 170.90 | 166.6 | -17.8 | 178.6 | 197.4 | 188.0 |
| Median Sales Price (Existing Single Fam. Home) | $197,900 | $195,300 | $197,600 | 9.8% | $195,950 | $175,783 | $164,933 |
| Monthly Mortgage Rate | 4.41% | 4.38% | 4.49% | 3.43% | 4.00% | 3.83% | 4.67% |
| Principal and Interest Payment | $794 | $781 | $800 | $642 | $750 | $657 | $682 |
| Median Family Income | $64,081 | $64,071 | $63,990 | $62,982 | $63,623 | $62,088 | $61,455 |
| Payment as a Percent of Income | 14.9 | 14.6 | 15.0 | 12.2 | 14.1 | 12.7 | 13.3 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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