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by Tom Moeller June 08, 2018
The National Association of Realtors reported that the Composite Index of Home Affordability declined 8.8% y/y during April to 145.8, the lowest level since October 2008. The index was 32.0% below its peak in January 2013. During the last ten years, there has been a 60% correlation between the affordability index level and the y/y change in existing single-family home sales.
Higher prices have reduced affordability. The median sales price of an existing home strengthened 5.5% y/y to $259,900. The price rise was accompanied by a higher average mortgage rate of 4.66%, up from a 3.43% in December 2012. Together, principal & interest payments rose to $1,073 or 17.1% of median income, the highest percentage since August 2007. That percentage compared to a low of 11.7% early in 2013. Growth in median family income slowed to 2.8% y/y from 3.9% during all of 2016.
The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter the home-buying market. Data on Home Affordability can be found in Haver's REALTOR database. Interest rate data can be found in the WEEKLY and DAILY databases.
| Housing Affordability | Apr | Mar | Feb | Apr Y/Y | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Composite Index | 145.8 | 150.0 | 160.1 | -8.8% | 158.5 | 168.2 | 168.0 |
| Median Sales Price (Existing Single Family Home) | $259,900 | $251,500 | $242,600 | 5.5% | $247,508 | $233,642 | $221,350 |
| Monthly Mortgage Rate | 4.66% | 4.63% | 4.42% | 4.11% | 4.20% | 3.88% | 4.03% |
| Principal and Interest Payment | $1,073 | $1,035 | $974 | 12.6% | $967 | $880 | $849 |
| Median Family Income | $75,093 | $74,944 | $74,828 | 2.8% | $73,545 | $70,941 | $68,267 |
| Payment as a Percent of Income | 17.1 | 16.6 | 15.6 | 15.6 | 15.8 | 14.9 | 14.9 |
