The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index rose 2.8% to 164.3 during September (11.5% y/y), the fourth consecutive month of increase. Despite the rise, affordability remained roughly one-quarter below the peak level in January 2013.

The September improvement in affordability occurred as principal & interest payments fell m/m to 15.2% of median income, the lowest percentage since January 2018. The percentage remained below its 18.2% peak in June of that year. The median sales price of an existing home eased 2.4% (+6.1% y/y) to $275,100. Payments also were pulled lower as the average mortgage interest rate in September dipped to 3.65%, remaining sharply below the high of 4.99% at the end of last year. Monthly principal & interest payments fell slightly m/m to $1,007 per month (-7.2% y/y). The y/y growth in median family income of 3.5% has been fairly steady this 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.