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Economy in Brief

U.S. Home Affordability Declines As Prices Rise
by Tom Moeller  May 10, 2019

The National Association of Realtors reported that its Composite Index of Home Affordability declined 2.5% during March (+0.1% y/y). Affordability stood 29.0% below the peak level during January 2013.

Together, principal & interest payments of $1,060 rose m/m to 16.4% of median income, but the percentage was the same as it was twelve months earlier. This percentage compares to a high of 18.2% last June, but was above the low of 11.6% early in 2013. The median sales price of an existing home rose 3.8% y/y to $261,100. The average mortgage rate slipped to 4.51% in March, but remained up from a 3.43% low in December 2012. Higher prices held back the affordability increase during the past year. Growth in median family income slowed to 2.6% y/y in March from 3.4% during all of last year and roughly 4.0% in the prior two years.

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 Mar Feb Jan Mar Y/Y 2018 2017 2016
Composite Index 152.7 156.6 154.6 0.1% 147.9 159.3 168.5
  Payment as a Percent of Income 16.4 16.0 16.2 16.4 17.0 15.7 14.9
  Principal and Interest Payment $1,060 $1,033 $1,050 2.4% $1,079 $967 $880
  Median Sales Price (Existing Single Family Home) $261,100 $252,000 $251,200 3.8% $259,458 $247,508 $233,642
  Monthly Mortgage Rate   4.51% 4.60% 4.76% 4.63% 4.72% 4.20% 3.88%
  Median Family Income $77,711 $77,644 $77,902 2.6% $76,396 $73,891 $71,062
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