U.S. Housing Affordability Index Declines in May to a Seven-Month Low
Summary
- Affordability continues to fall, w/ HAI down for four straight months.
- Median sales price of a home rises for the fourth consecutive month to a record high.
- Mortgage rates up to a six-month-high 7.14%; mortgage payments up to a record high.
- Median family income rises to a record-high $102,364 (+5.3% y/y).
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) fell 3.1% m/m to 93.1 in May after a 5.0% decline to 96.1 in April (-5.2%; 95.9 initially). The May reading was the fourth successive m/m fall to the lowest HAI level since October 2023. The HAI year-on-year rate was at -6.5% in May, slightly less severe than -6.7% in April but more severe than -2.4% in May 2023. The affordability level had plunged 46.9% from a high of 175.2 in January 2021 and 48.0% from a peak of 179.0 in April 2020.
The May affordability fall occurred as the median price of an existing single-family home rose 3.3% (5.7% y/y) to $424,500 after a 3.7% April increase to $411,100. That was the fourth straight m/m rise to the highest level on record. The monthly mortgage interest rate rose to 7.14% in May, the highest since November 2023, from 7.07% in April. The latest rate, while modestly below its recent high of 7.70% in October 2023, was above 6.51% in May 2023 and significantly higher than a low of 2.73% in December 2020. Principal & interest payments grew 3.9% (12.7% y/y), the fourth consecutive m/m increase, to $2,291 per month, the highest on record, on top of a 5.5% April rise to $2,204.
Median family income increased 0.7% (5.3% y/y) to a record-high $102,364 in May after a 0.1% uptick to $101,663 in April, continuing a string of gains since February 2023. Mortgage payments as a percent of income rose to 26.9% in May from 26.0% in April, registering the highest reading since a high of 27.4% in October 2023; these numbers remained up from 25.1% in May 2023 and a low of 14.3% in January 2021.
The HAI fell in all of the four census regions in May. The index declined 4.8% (-7.1% y/y) to 120.3 in the Midwest, 4.4% (-10.1% y/y) to 90.5 in the Northeast, 2.2% (-4.1% y/y) to 95.7 in the South, and 0.7% (-5.9% y/y) to 66.8 in the West.
The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022 (98.8).
Data on Housing Affordability can be found in Haver’s REALTOR database. Median home sales prices are also available in USECON. Higher frequency interest rate data are found in SURVEYS, WEEKLY, and DAILY.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
