• Housing affordability decreased in August for the fourth consecutive month.

• Falling incomes and rising home prices offset record low mortgage interest rates.

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index declined 2.1% to 158.9 in August (-0.6% year-on-year). After hitting a four-year high in April, affordability has declined for four consecutive months as incomes have fallen and home prices have risen.

Median family income, which is projected by the National Association of Realtors, dropped 1.5% in August (+2.2% y/y). Incomes had jumped in April as government support programs offset falling compensation. Since then, the reverse has happened. Meanwhile, the effective mortgage interest rate declined eight basis points to a record low 3.00% in August (data goes back to 1981). The median sales price, which was already reported last month, increased 1.8% to a record high $315,000. Putting this together, monthly principal and interest payments increased to $1,062, raising the payment share of income to 15.7%. This ratio has been range bound for the last seven years.

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.