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Economy in Brief

U.S. Home Affordability Declines
by Tom Moeller  January 11, 2019

The National Association of Realtors reported that its Composite Index of Home Affordability declined 10.6% y/y during November to 144.0. The index was one-third below its peak in January 2013. Month-to-month, home affordability declined 2.0%.

Together, principal & interest payments of $1,117 rose m/m to 17.4% of median income from 15.5% twelve months earlier. These percentages compare to a low of 11.6% early in 2013. Higher prices helped reduced affordability during the past year. The median sales price of an existing home strengthened 5.0% y/y to $260,500. The average mortgage rate rose to 4.99% in November, up from a 3.43% low in December 2012. Growth in median family income slowed to 3.0% y/y in November from 4.0% during all of last year.

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 Nov Oct Sep Nov Y/Y 2017 2016 2015
Composite Index 144.0 146.9 147.4 -10.6% 159.3 168.5 168.0
  Payment as a Percent of Income 17.4 17.0 17.0 15.5 15.7 14.9 14.9
  Principal and Interest Payment $1,117 $1,092 $1,085 15.2% $967 $880 $849
  Median Sales Price (Existing Single Family Home) $260,500 $257,700 $259,300 5.0% $247,508 $233,642 $221,350
  Monthly Mortgage Rate   4.99% 4.88% 4.77% 4.19% 4.20% 3.88% 4.03%
  Median Family Income $77,216 $77,021 $76,654 3.0% $73,891 $71,062 $68,260
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