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Economy in Brief

U.S. Housing Affordability Eases During October
by Tom Moeller  December 11, 2020

• A decline in income more than offsets lower principal & interest payments.

• October's slip in affordability follows upward revisions to earlier data.

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index slipped 0.1% to 167.2 during October from 167.4 in September, revised from 159.6. Affordability was 8.5% below its April high. This month's release included revisions back through 2019.

A rise to 15.0% in mortgage payments as a percent of income caused the decline in affordability. That share was 13.7% in April, but below the June 2018 high of 18.1%. Principal & interest payments eased 0.4% (+4.1% y/y) to $1,055 but income slipped 0.5% (+3.3% y/y) to $84,672. The effective mortgage interest rate declined to a record low of 2.88% in October (figures date back to 1981). The median sales price, which was reported last month, increased 0.5% (16.0% y/y) to a record high of $317,700

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 Oct Sep Aug Y/Y% 2019 2018 2017
Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) 167.2 167.4 166.0 -0.8 161.1 147.9 159.1
  Payment as a Percent of Income 15.0 14.9 15.1 14.8 15.5 17.0 15.7
  Principal and Interest Payment ($) 1,055 1,059 1,062 4.1 1,044 1,079 967
  Monthly Mortgage Rate (%)   2.88 2.95 3.00 3.65 4.04 4.72 4.20
  Median Family Income ($) 84,672 85,100 84,616 3.3 80,704 76,401 73,891
  Median Sales Price (Existing Single-Family Home, $) 317,700 316,000 314,800 16.0 272,333 259,458 247,508
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