U.S. Housing Affordability Falls Again in February
by:Tom Moeller
|in:Economy in Brief
Summary
- Higher prices & mortgage rates continue to drive home affordability lower.
- Principal & interest payments surge.
- Payment as a percent of income increases one percentage point m/m.
Finding an affordable home is becoming increasingly difficult. The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index fell 5.4% to 135.4 in February and has fallen 26.3% since its recent peak in January 2021. The Housing Affordability Index equals 100 when median family income equals the amount required for an 80% mortgage on a median-priced existing single-family home.
In February, a 2.0% rise (15.5% y/y) in the median sales price of a home to $363,800 was accompanied by a rise in mortgage rates to 3.83%, up from 2.86% twelve months earlier. As a result, the monthly mortgage payment rose 6.1% m/m to a record $1,361 (30.4% y/y) from $1,283 in January.
Median family income in February rose 0.4% (3.6% y/y) to $88,424 from $88,114 in January. Consequently, the standard mortgage payment as a percent of income rose to 18.5%, the highest level since August 2008. These figures are up from a recent low of 13.6% in January of 2021.
Data on Housing Affordability can be found in Haver's REALTOR database. Median home sale prices are also located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.
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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