U.S. Housing Affordability Index Slips in February
by:Tom Moeller
|in:Economy in Brief
Summary
- Home prices rise following several months of decline.
- Monthly mortgage payments remain high.
- Mortgage rates ease & income increases.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index eased 0.3% (-19.7% y/y) to 103.9 in February following a 2.8% January increase to 104.2. This gain followed a 7.5% December improvement and a 3.3% November rise. The latest level of the affordability index remained down from an April 2020 peak of 179.6.
The February slip occurred as the median price of an existing single-family home rose 0.6% (-0.7% y/y) to $367,500 following sharp declines in each of the prior seven months. The principal & interest payment rose 0.4% (32.0% y/y) to $1,827 per month. The payment as a percent of income edged higher to 24.1%, but remained down from the 27.4% high in October of last year.
Working to support home affordability, the average mortgage interest rate eased to 6.34% in February, the lowest level since September. It remained above 3.83% last February and the December 2020 low of 2.73%. Median family income rose 0.2% (6.0% y/y) to $91,152 in February after holding steady in January.
Monthly changes in affordability were mixed amongst the four Census regions. Affordability rose 8.9% (-15.2% y/y) in the Northeast and by 0.4% (-14.9% y/y) in the West. In the Midwest, home affordability fell 3.3% (-24.0% y/y) while in the South, home affordability declined 2.4% (-21.7% 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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