U.S. Housing Affordability Continues to Rise in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Home prices & interest rates fall again.
- Family income continues to improve.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index increased 7.3% (-28.8% y/y) to 101.2 in December after rising 3.3% to 94.3 in November, revised from 95.5. These increases followed declines in both October and September. Affordability remained down 42.3% since the most recent high in January 2021.
The December gain occurred as the median price of an existing single-family home fell 1.6% (+2.0% y/y) to $372,700. It was the sixth consecutive monthly decline. The average mortgage rate fell to 6.44% from 6.89%, but it remained above the December 2020 low of 2.73%. Principal & interest payments declined 6.0% (+49.1% y/y) to $1,873 per month.
Median family income rose 0.9% (6.2% y/y) to $90,984 in December following a 0.8% November gain. That lowered the payment as a percent of income to 24.7% from a high of 27.4% in October. It remained above its most recent low of 14.2% in January 2021.
Affordability rose in each of the four Census regions. In the West, it rose 8.7% (-26.7% y/y) while in the South, it increased 6.5% (-29.5% y/y). In the Midwest, affordability rose 7.8% (-29.5% y/y) while in the Northeast, it improved 10.9% (-28.3% y/y).
The Housing Affordability Index equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. Until the HAI fell below 100 in May 2022 (98.3), it had exceeded 100 in each month since July 1990, reaching its all-time high of 213.3 in January 2013.
Data on Housing Affordability can be found in Haver's REALTOR database. Median home sale prices are also located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.
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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