Global| Mar 13 2020U.S. Housing Affordability Increases as Mortgage Rates Decline
by:Tom Moeller
|in:Economy in Brief
Summary
The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index improved 4.1% m/m (9.2% y/y) to 168.4 in January following a 1.2% decline during December. It was the highest level of [...]
The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index improved 4.1% m/m (9.2% y/y) to 168.4 in January following a 1.2% decline during December. It was the highest level of affordability since November 2016, but remained below the all-time high of 213.3 reached in January 2013.
In January, the effective mortgage interest rate declined ten basis points to 3.68% and remained below the 4.99% recorded in November of 2018. Monthly principal and interest payments fell to $987 from $1,030 in December. They declined to 14.8% of income, the lowest level since November 2016. The median sales price of a home increased 6.9% y/y to $268,600. Median family income rose 2.7% y/y to $79,796.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 an increasing number of buyers can qualify for a mortgage to purchase the median-priced home. 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 | Jan | Dec | Nov | Jan Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Fixed Rate Housing Affordability Index | 168.4 | 161.7 | 163.7 | 9.2% | 157.4 | 147.8 | 159.1 |
| Payment as a Percent of Income | 14.8 | 15.5 | 15.3 | 16.2 | 15.9 | 16.9 | 15.7 |
| Principal and Interest Payment | $987 | $1,030 | $1,016 | -6.0% | $1.044 | $1,079 | $967 |
| Monthly Fixed Mortgage Rate (%) | 3.68 | 3.78 | 3.75 | 4.76 | 4.04 | 4.72 | 4.20 |
| Median Family Income | $79,796 | $79,931 | $79,839 | 2.7% | 3.3% | 3.4% | 4.0% |
| Median Sales Price (Existing Single Family Home) | $268,600 | $277,000 | $274,100 | 6.9% | 5.0% | 4.8% | 5.9% |
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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