U.S. Housing Affordability Index Plunges in October; Lowest Since August 1985
Summary
- Affordability continues to fall in Oct., w/ HAI down 5.6% m/m and down a record 36.4% y/y.
- Mortgage rates rise to 6.98%, the highest since Aug. ’01; mortgage payments increase for the second straight month.
- Median sales price of a home declines 1.2% to an eight-month-low $384,900.
- Median family income rises to a record-high $89,507.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index fell 5.6% m/m to 91.2 in October after a 6.9% drop to 96.6 in September and a 4.2% rise to 103.8 in August. The October reading was the second consecutive m/m fall to the lowest level since August 1985 following rises in August and July and nine straight m/m drops. The HAI slid 36.4% y/y in October, the deepest slide on record, after a 34.2% decrease in September. The affordability level has plunged 49.2% from its April 2020 peak of 179.6 and 48.0% from its January 2021 high of 175.5.
Affordability continued to decline in October, with the effective mortgage interest rate rising to 6.98%, the highest since August 2001, from September’s 6.18%. The mortgage rate was up from 3.12% last October and a record-low 2.73% in December 2020. Principal & interest payments rose 7.3% to $2,044 per month (64.6% y/y) following a 7.6% September rebound to $1,905 and two successive m/m declines. The median sales price of a home fell 1.2% (+6.2% y/y) to $384,900 in October, the fourth consecutive m/m fall to the lowest level since February, after a 2.3% drop to $389,600 in September.
Median family income grew 0.9% (4.6% y/y) to $89,507 in October, the ninth straight m/m gain to a record high, after a 0.6% increase to $88,693 in September. Mortgage payments as a percent of income rose to 27.4%, the highest since May 1985, from September's 25.8%; these numbers were up from 17.4% last October and a 13.9% low in April 2020.
Affordability dropped m/m in each of the four Census regions, falling 6.2% (-35.7% y/y) in the West, 5.7% (-37.2% y/y) in the South, 5.1% (-36.3% y/y) in the Midwest, and 4.5% (-37.4% y/y) in the Northeast.
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.
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.
More Economy in Brief
