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Economy in Brief

U.S. Housing Affordability Improves in July
by Tom Moeller  September 10, 2021

• Mortgage payments slip with lower prices.

• Interest rates ease.

• Family income improves.

The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index rose 2.7% during July (-11.9% y/y) to 150.4 following four declines in the prior five months. Affordability has fallen, nevertheless, 19.9% since its January high. 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 improved  during July as the median sales price of a home eased 0.8% (+18.6% y/y) to $367,000. The effective mortgage rate also fell to 2.92% from 3.03%. It reached a high of 4.99% late in 2018. That lowered principal & interest payments to $1,225 per month (+16.1% y/y) and 16.6% of income.

Family income edged 0.4% higher (2.3% y/y) to $88,457 but it remained 2.9% below the January high.

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 Jul Jun May Y/Y % 2020 2019 2018
Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) 150.4 146.5 152.3 -11.9 172.3 161.3 147.9
  Payment as a Percent of Income 16.6 17.1 16.4 14.6 14.5 15.5 17.0
  Principal and Interest Payment ($) 1,225 1,253 1,205 16.1 1,028 1,044 1,079
  Monthly Mortgage Rate (%)   2.92 3.03 3.01 3.08 3.17 4.04 4.72
  Median Family Income ($) 88,457 88,139 88,067 2.3 84,969 80,808 76,401
  Median Sales Price (Existing Single-Family Home, $) 367,000 370,100 356,800 18.6 298,708 272,333 259,458
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