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Economy in Brief

U.S. Housing Affordability Continues to Fall in December
by Tom Moeller  February 11, 2022

• Rising home prices couple with higher mortgage rates to dampen affordability.

• Family income increase fails to keep pace with rising home costs.

• Payment as a percent of income reaches six-month high.

Potential home buyers are increasingly challenged when it comes to finding affordable properties. The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index fell 0.9% in December (-14.7% y/y) to 147.1 from 148.4 in November, revised from 147.8. The October figure was unrevised at 148.8. Affordability has fallen 21.7% since its recent high of 187.8 in January 2021. The Housing Affordability Index equals 100 when median family income equals the amount required for an 80% mortgage on a median priced existing single-family home.

In December, the median sales price of a home rose 0.8% (16.1% y/y) to $364,300, following a 0.5% November increase to $361,300. Mortgage rates rose to 3.15% in December 2021, up from a low of 2.73% twelve months earlier. As a result, the monthly mortgage payment rose 1.2% to $1,252 (22.5% y/y) from $1,237, roughly equaling the June 2021 record of $1,253.

Median family income in December rose 0.3% (4.5% y/y) to $88,417 from $88,137 in November. As a result, the standard mortgage payment as a percent of income rose to 17.0%, the highest in six months. These figures are increased from a low of 13.3% last January.

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

Searching for Maximum Employment from the Federal Reserve Bank of San Francisco can be found here.

Housing Affordability Dec Nov Oct Y/Y % 2021 2020 2019
Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) 147.1 148.4 148.8 -14.7 157.9 172.3 161.3
  Payment as a Percent of Income 17.0 16.8 16.8 14.5 15.9 14.5 15.5
  Principal and Interest Payment ($) 1,252 1,237 1,231 22.5 1,183 1,028 1,044
  Monthly Mortgage Rate (%)   3.15 3.12 3.12 2.73 3.01 3.17 4.04
  Median Family Income ($) 88,417 88,137 87,941 4.5 89,166 84,969 80,808
  Median Sales Price (Existing Single-Family Home, $) 364,300 361,300 359,500 16.1 350,167 298,708 272,333
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