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Economy in Brief

U.S. Housing Affordability Falls in May
by Tom Moeller  July 9, 2021

• Income eases after falling sharply in April minus government stimulus payouts.

• Mortgage payments rise again with higher home prices.

• Interest rates ease.

The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index declined 2.6% during May (-15.7% y/y) to 151.7 from 155.8 in April. Affordability has fallen 18.4% since January. A Housing Affordability Index of 100 indicates that a family earning the median income qualifies for an 80% mortgage on a median-priced existing single-family home. This index has been above 100 in each month since July 1990, reaching its all-time high of 213.3 in January 2013.

Affordability was reduced during May as median family income declined 1.0% to $87,689 (+1.2% y/y). In addition, the median sales price for an existing single-family home rose 3.0% (24.4% y/y) to $356,600, the fourth straight month of strong increase. That raised the principal & interest payments to $1,204 (20.0% y/y). Payments as a percent of income rose to 16.5%, the highest level in two years.

Holding back the increase in mortgage payments in May was a decline in the effective mortgage interest rate to 3.01% from 3.11% in April. The rate reached a high of 4.99% late in 2018.

Data on Housing Affordability can be found in Haver's REALTOR database. Median home sale prices also are located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.

Housing Affordability May Apr Mar Y/Y % 2020 2019 2018
Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) 151.7 155.8 175.0 -15.7 172.0 161.1 147.9
  Payment as a Percent of Income 16.5 16.0 14.3 13.9 14.5 15.5 17.0
  Principal and Interest Payment ($) 1,204 1,184 1,138 20.0 1,028 1,044 1,079
  Monthly Mortgage Rate (%)   3.01 3.11 3.14 3.29 3.17 4.04 4.72
  Median Family Income ($) 87,689 88,546 95,585 1.2 84,843 80,704 76,401
  Median Sales Price (Existing Single-Family Home, $) 356,600 346,200 331,500 24.4 298,708 272,333 259,458
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