U.S. Housing Affordability Declines in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Home prices strengthen.
- Mortgage interest rates rise.
- Family income improves.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index weakened 5.0% in March (-17.0% y/y) to 98.6 after falling 0.4%, revised from -0.3% in February. These declines followed three straight months of firm gain. The latest level of the affordability index remained down from an April 2020 peak of 179.6.
The March decline occurred as the median price of an existing single-family home jumped 3.2% (-1.4% y/y) to $380,000 after increasing 0.7% in February. The average mortgage interest rate rose to 6.54% from 6.34%. It was the highest rate in four months. The monthly principal & interest payment rose 5.4% (27.3% y/y) to $1,929 per month. The payment as a percent of income rose to 25. 4%, but remained down from the 27.4% high in October of last year.
Median family income edged 0.1% higher during March (5.6% y/y) to a record $91,261 after a 0.2% gain in February.
Monthly changes in affordability were mixed amongst the four Census regions. Affordability fell 6.3% (-18.3% y/y) in the Northeast and by 5.8% (-11.0% y/y) in the West. In the Midwest, home affordability fell 6.6% (-19.6% y/y) while in the South, home affordability declined 4.2% (-18.1% 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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