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Economy in Brief

U.S. Housing Affordability Fell Back in February, but Still in Recent Range
by Carol Stone, CBE  April 16, 2021

• House prices down in January and up in February.

• Income swings up in January and down in February.

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index decreased 7.6% (-1.4% y/y) in February to 173.1. This decline followed a 9.1% jump in January, which had lifted the index to 187.4, its highest since 193.2 in March 2013. 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

In February, median family income declined while median house prices increased. The income measure fell 4.9% (+3.5% y/y) after a hefty 7.0% rise in January, and house prices rose 3.0% (16.2% y/y) to $317,100 after falling 1.8% in January. Income had been bolstered in January by the federal government’s special income support payments. The mortgage interest rate was unchanged in February at its all-time low of 2.73%, which it sustained through December, January and February. The house price measure and the interest rate combine to make the monthly payment $1,033, also up 3.0% in February and 5% from a year ago. The payment represented 14.4% of median income, up from 13.3% in January and almost the same as the February 2020 amount of 14.2%.

Data on Housing Affordability can be found in Haver's REALTOR database. Median sales prices are located in USECON. Higher frequency interest rate data can be found in SURVEYW, WEEKLY, and DAILY.

Housing Affordability Feb Jan Dec Y/Y% 2020 2019 2018
Fixed Rate Mortgage Housing Affordability Index (100+=More Affordable) 173.1 187.4 171.8 -1.4 172.0 161.1 147.9
  Payment as a Percent of Income 14.4 13.3 14.5 14.2 14.5 15.5 17.0
  Principal and Interest Payment ($) 1,033 1,003 1,022 5.0 1,028 1,044 1,079
  Monthly Mortgage Rate (%)   2.73 2.73 2.73 3.53 3.17 4.04 4.72
  Median Family Income ($) 85,817 90,239 84,290 3.5 84,843 80,704 76,401
  Median Sales Price (Existing Single-Family Home, $) 317,100 308,000 313,700 16.2 298,708 272,333 259,458
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