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Economy in Brief

U.S. Housing Affordability Declines in April
by Tom Moeller  June 18, 2021

• 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
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