• Falling incomes offset record low mortgage interest rates.

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index declined 3.8% to 163.7 in June (+7.9% y/y) from a 0.9% drop in May (+12.9% y/y). The index had reached a four-year high in April.

Median family income, which is projected by the National Association of Realtors, dropped 0.6% in June (+3.4% y/y), following a steeper 2.5% monthly decline in May (+4.2% y/y). Family income had jumped 6.6% in April (+7% y/y), reflecting the sharp rise in government transfers. A drop in government support programs ensued in May and June, explaining the monthly declines in income during these two months.

The effective mortgage interest rate declined to a new record low of 3.22% in June, from 3.29% in May and down from an average 4% in 2019, while the median sales price rose 4.2% to $298,600.

All in all, these changes pushed up the monthly principal and interest payments to $1036 in June from $1,003 in May, while the payment share of income rose to 15.3% from 14.7%.

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.