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Economy in Brief
U.S. Wholesale Inventories Post Strong February Gain; Sales Fall
Wholesale inventories increased 0.6% (2.0% y/y) during February...
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Total PMIs Gain Traction in March
The PMI readings for March show improvement again...
U.S. Consumer Credit Outstanding Bounces Back in February
Consumer credit outstanding surged $27.6 billion during February...
U.S. Trade Deficit Widens to Record during February
The U.S. trade deficit in goods and services widened to $71.1 during February...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Gerald D. Cohen July 10, 2020
• 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 $1,007 raising the payment share of income to 14.8%.
The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median-priced existing single-family home. A rising index indicates an increasing number of buyers can qualify for a mortgage to purchase the median-priced home. Data on Home Affordability can be found in Haver's REALTOR database. Median sales prices are located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.
Housing Affordability | May | Apr | Mar | Y/Y% | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Fixed Rate Housing Affordability Index (100+ = Affordable) | 169.4 | 171.7 | 162.1 | 12.3 | 157.6 | 147.9 | 159.1 |
Payment as a Percent of Income | 14.8 | 14.6 | 15.4 | 16.6 | 15.9 | 16.9 | 15.7 |
Principal and Interest Payment ($) | 1,007 | 1,020 | 1,016 | -7.4 | 1,044 | 1,079 | 967 |
Monthly Fixed Mortgage Rate (%) | 3.29 | 3.37 | 3.51 | 4.11 | 4.04 | 4.72 | 4.20 |
Median Family Income ($) | 81,859 | 84,065 | 79,072 | 4.1 | 78,959 | 76,401 | 73,891 |
Median Sales Price (Existing Single Family Home, $) | 287,700 | 288,700 | 282,600 | 2.4 | 272,333 | 259,458 | 247,508 |