Global| Jul 12 2019U.S. Home Affordability Declines With Higher Prices
by:Tom Moeller
|in:Economy in Brief
Summary
The National Association of Realtors reported that its Mortgage Fixed Rate Index of Home Affordability declined 1.4% during May (+5.6% y/y). Affordability stood 29.5% below the peak level during January 2013. The fixed rate mortgage [...]
The National Association of Realtors reported that its Mortgage Fixed Rate Index of Home Affordability declined 1.4% during May (+5.6% y/y). Affordability stood 29.5% below the peak level during January 2013. The fixed rate mortgage index replaces the composite index which was discontinued.
Together, principal & interest payments of $1,084 rose m/m to 16.6% of median income, but the percentage was down from 17.6% twelve months earlier. This percentage compares to a high of 18.2% last June, and was above the low of 11.6% early in 2013. The median sales price of an existing home rose 4.6% y/y to $280,200. The average mortgage rate declined to 4.11% in May, down from December's high of 4.99%. A 4.6% rise in prices held back the affordability increase during the past year. Growth in median family income slowed to 2.9% y/y in May from 3.4% during all of last year and roughly 4.0% in the prior two 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 more buyers can afford to enter the home-buying market. Data on Home Affordability can be found in Haver's REALTOR database. Interest rate data can be found in the WEEKLY and DAILY databases.
| Housing Affordability | May | Apr | Mar | May Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Fixed Mortgage Rate Index | 150.4 | 152.5 | 152.6 | 5.6% | 147.8 | 159.1 | 167.7 |
| Payment as a Percent of Income | 16.6 | 16.4 | 16.4 | 17.6 | 17.0 | 15.7 | 14.9 |
| Principal and Interest Payment | $1,084 | $1,065 | $1,061 | -2.5% | $1,079 | $967 | $880 |
| Median Sales Price (Existing Single Family Home) | $280,200 | $269,100 | $261,500 | 4.6% | $259,458 | $247,508 | $233,642 |
| Monthly Fixed Mortgage Rate | 4.11% | 4.30% | 4.51% | 4.71% | 4.72% | 4.20% | 3.88% |
| Median Family Income | $78,238 | $77,944 | $77,711 | 2.9% | $76,396 | $73,891 | $71,062 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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