Global| Apr 08 2016U.S. Home Affordability Improves as Mortgage Payments Decline
by:Tom Moeller
|in:Economy in Brief
Summary
The National Association of Realtors reported that the Composite Index of Home Affordability increased 2.2% m/m to 174.9 in February following a 5.4% January gain. Nevertheless, the index remained down 3.5% versus 12-months earlier. [...]
The National Association of Realtors reported that the Composite Index of Home Affordability increased 2.2% m/m to 174.9 in February following a 5.4% January gain. Nevertheless, the index remained down 3.5% versus 12-months earlier. During the last ten years, there has been a 62% correlation between the affordability index level and the y/y change in new plus existing single-family home sales.
Mortgage payments as a percent of income eased to 14.3% in February, down from a 16.2% high last July. A lower 4.04% mortgage rate accounted for much of the improvement, down from 4.54% at the beginning of 2014. A 1.2% m/m decline in home prices also fostered home affordability, though prices were up 4.3% y/y. Affordability was further enhanced by a 2.1% y/y rise in median family income. That rate of gain was down from its 3.3% peak at the end of 2014.
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.
The National and Local Economic Outlook: An Update is the title of today's speech by William C. Dudley, New York Federal Reserve Bank President & CEO, and it can be found here.
| Housing Affordability | Feb | Jan | Dec | Feb Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Index | 174.9 | 171.2 | 162.5 | -3.5% | 166.1 | 167.8 | 179.7 |
| Median Sales Price (Existing Single Family Home) | $212,300 | $214,800 | $224,900 | 4.3% | $221,350 | $207,125 | $195,933 |
| Monthly Mortgage Rate | 4.04% | 4.12% | 4.14% | 3.92% | 4.03% | 4.30% | 4.00% |
| Principal and Interest Payment | $815 | $832 | $874 | 5.8% | $849 | $820 | $750 |
| Median Family Income | $68,405 | $68,379 | $68,163 | 2.1% | $67,507 | $65,910 | $64,030 |
| Payment as a Percent of Income | 14.3 | 14.6 | 15.4 | 13.8 | 15.1 | 14.9 | 14.0 |
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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