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Economy in Brief

U.S. Housing Affordability Declines As House Prices Rise
by Tom Moeller  February 14, 2020

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index fell 1.2% m/m (+10.4% y/y) to 161.8 in December from 163.7 in November. It was the lowest level of affordability since August and remained well below the all-time high of 213.3 reached in January 2013.

In December, monthly principal and interest payments increased to $1,030 from $1,016 in November.

and rose to 15.5% of income. The median sales price increased 8.0% y/y to $277,000. Median family income continued to increase, rising to $79,970, up 3.3% y/y. The effective mortgage interest rate edged up three basis points to 3.78% in December, but remained below the 4.99% recorded in November of 2018.

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 an increasing number of buyers can qualify for a mortgage to purchase the median-priced home. 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 Dec Nov Oct Dec Y/Y 2019 2018 2017
Fixed Rate Housing Affordability Index 161.8 163.7 163.3 10.4% 157.4 147.8 159.1
  Payment as a Percent of Income 15.5 15.3 15.3 17.1 15.9 16.9 15.7
  Principal and Interest Payment $1,030 $1,016 $1,013 8.0% $1.044 $1,079 $967
  Median Sales Price (Existing Single Family Home) $277,000 $274,100 $273,800 $256,400 $272,333 $259,458 $247,508
  Monthly Fixed Mortgage Rate   3.78% 3.75% 3.74% 4.99% 4.04% 4.72% 4.20%
  Median Family Income $79,970 $79,824 $79,425 3.3% 3.2% $3.4% 4.0%
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