U.S. Housing Affordability Declines in September
by:Sandy Batten
|in:Economy in Brief
Summary
- Rise in mortgage rates more than offset decline in home prices.
- Mortgage payment overall and as a percent of income rose.
- Affordability continued to fall sharply from a year ago.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index fell 6.9% m/m (-34.2% y/y) to 96.6 in September following a 4.2% monthly gain in August. This was the tenth decline in the past 12 months. From its most recent peak of 179.6 in April 2020, the index has fallen 46.2%.
Affordability declined in September as an 89-basis point increase in the mortgage interest rate (to 6.18% from 5.29%) more than offset a 2.0% m/m decline in the median-priced existing single-family home and a 0.6% m/m increase in median family income to a series high of $88,693. Monthly principal and interest payments increased 8.0% m/m in September to $1,912 from $1,770 in August. Mortgage payments as a percent of income rose to 25.9% in September from 24.1% in August.
Affordability declined in each of the four Census regions, falling 3.8% m/m in the Northeast, 7.3% in the Midwest, 7.7% in the South and 7.0% in the West.
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 it fell below 100 in May 2022, the index 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.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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