Global| Jun 18 2021U.S. Housing Affordability Declines in April
by:Tom Moeller
|in:Economy in Brief
Summary
• Mortgage payments jump with higher home prices. • Incomes decline after government stimulus payouts in March. • Interest rates ease. The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index declined [...]
• Mortgage payments jump with higher home prices.
• Incomes decline after government stimulus payouts in March.
• Interest rates ease.
The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index declined 11.0% during April (-14.7% y/y) to 155.8 from 175.0 in March, revised from 173.6. It was the lowest affordability level since June 2009 and 16.2% below its recent high in January of this year. 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.
Acting to reduce affordability in April, median family income declined 7.4% to $88,546 (-1.0% y/y), absent stimulus checks. In addition, the median sales price for an existing single-family home rose 4.4% (19.9% y/y) to $346,200, the third straight month of strong increase. That raised the principal & interest payments to $1,184 (16.1% y/y). Payments as a percent of income rose to 16.0%, the highest level since June 2019.
Holding back the increase in mortgage payments in April was a decline in the effective mortgage interest rate to 3.11% from 3.14% in March, which was the highest level since June 2020.
Data on Housing Affordability can be found in Haver's REALTOR database. Median home sale prices also are located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.
| Housing Affordability | Apr | Mar | Feb | Y/Y % | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) | 155.8 | 175.0 | 171.3 | -14.7 | 172.0 | 161.1 | 147.9 |
| Payment as a Percent of Income | 16.0 | 14.3 | 14.6 | 13.7 | 14.5 | 15.5 | 17.0 |
| Principal and Interest Payment ($) | 1,184 | 1,138 | 1,044 | 16.1 | 1,028 | 1,044 | 1,079 |
| Monthly Mortgage Rate (%) | 3.11 | 3.14 | 2.86 | 3.37 | 3.17 | 4.04 | 4.72 |
| Median Family Income ($) | 88,546 | 95,585 | 85,817 | -1.0 | 84,843 | 80,704 | 76,401 |
| Median Sales Price (Existing Single-Family Home, $) | 346,200 | 331,500 | 315,100 | 19.9 | 298,708 | 272,333 | 259,458 |
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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