• Housing affordability decreased in May from a four-year high in April.

• Falling incomes offset record low mortgage interest rates.

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index declined 1.3% to 169.4 in May (+12.3% year-on-year), from a four-year high in April.

Median family income, which is projected by the National Association of Realtors, dropped 2.6% in May (+ 4.1% y/y) after jumping 6.3% in April. The Bureau of Economic Analysis monthly personal income report for May showed falling government support programs offsetting rising compensation. The reverse happened in April. Meanwhile, the effective mortgage interest rate declined eight basis points to a record low 3.29% in May (data goes back to 1981). The median sales price, which was already reported last month, edged down 0.3% to $287,700. Putting this together, monthly principal and interest payments decreased to $1,007 raising the payment share of income to 14.8%.

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. Median sales prices are located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.