U.S. Housing Affordability Improves During August
by:Tom Moeller
|in:Economy in Brief
Summary
- Home prices & mortgage rates ease.
- Mortgage payment as percent of income falls.
- Index remains down sharply y/y.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index rose 4.8% (-28.3% y/y) to 104.4 in August after a 5.4% July increase. These gains followed nine consecutive monthly declines. Despite the latest increase, the level of affordability remained down 40.5% from its January 2021 peak.
Affordability improved In August as the median home price fell 2.3% (+7.6% y/y) to $396,300. The price peaked at a record $420,900 in June. Also helping affordability, the average mortgage rate eased to 5.29% from 5.48%, though that remained up from the 2.73% low in December 2020. These declines reduced principal & interest payments to $1,759 per month (+43.7% y/y) from June's record $1,933. It remained up from $984 in February 2020.
Also helping to raise affordability, the median family income rose 0.3% (3.1% y/y) to $88,173 in August after a 0.2% July rise. It remained 0.7% below the March 2021 high of $88,827. Mortgage payments as a percent of income declined to 23.9% from a high of 26.5% in June. This figure remained up from a 13.9% low in April 2020.
The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. This index has been above 100 in each month (except June 2022) 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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