Global| Feb 13 2015U.S. Home Affordability Deteriorates in 2014
by:Tom Moeller
|in:Economy in Brief
Summary
The National Association of Realtors reported that during all of last year its Housing Affordability Composite Index declined to 166.2, the lowest level since 2008. For December, the index improved somewhat to 167.8 but remained down [...]
The National Association of Realtors reported that during all of last year its Housing Affordability Composite Index declined to 166.2, the lowest level since 2008. For December, the index improved somewhat to 167.8 but remained down 1.6% from December 2013. The Affordability Index was at its peak of 212.5 in January 2013 when average mortgage interest rates were at their low of 3.47%.
The decline in affordability last year reflected a rise in the average mortgage rate to 4.30% but then it fell back by December to 4.16%. The median sales price increased 5.8% for the full year to $207,208 on top of an 11.5% rise in 2013. The latest price of $210,200 was up 6.3% y/y but down from the June peak of 223,000, due to seasonal pressures. Median family income rose during December to $65,897, up 1.5% y/y. For the full year, income rose 2.0% to $65,321. Higher rates combined with improved home prices to raise the monthly mortgage payment to 15.1% of income for all of last year, up from 12.6% in 2012.
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 | Dec | Nov | Oct | Dec Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Index | 167.8 | 169.5 | 166.4 | -1.6 | 166.2 | 179.6 | 198.8 |
| Median Sales Price (Existing Single Fam. Home) | $210,200 | $207,900 | $208,000 | 6.3% | $207,208 | $195,933 | $175,783 |
| Monthly Mortgage Rate | 4.16% | 4.16% | 4.29% | 4.41% | 4.30% | 4.00% | 3.83% |
| Principal and Interest Payment | $818 | $809 | $822 | $793 | $820 | $750 | $657 |
| Median Family Income | $65,897 | $65,803 | $65,646 | $64,935 | $65,321 | $64,030 | $62,531 |
| Payment as a Percent of Income | 14.9 | 14.8 | 15.0 | 14.7 | 15.1 | 14.0 | 12.6 |
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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