The Latest Housing Affordability Index Data

The Latest Housing Affordability Index Data
National Association of REALTORS® – Economists’ Outlook Blog
Michael Hyman, Research Assistant | September 15, 2014

REALTORlogoAt the national level, housing affordability is down for the month of July and from a year ago, due to home prices that continue to rise faster than incomes. Despite those factors, slower-paced price growth and the second lowest mortgage rates of the year are good for a change in affordability.

  • Housing affordability is down for the month of July, as the median price for a single family home in the US may have met its seasonal peak.
  • The median single-family home price is $223,900, up 5.1 % from July 2013 as year-over-year price gains are currently slowing down. Mortgage rates are up 12 basis points (one percentage point equals 100 basis points) from last year. Nationally, affordability is down from 160.7 in July 2013 to 153.8 in July 2014.
  • Affordability is down slightly from one month ago in all regions except the Midwest. The Midwest was the only region to experience a slight gain in affordability due to lower home prices and qualifying incomes. From one year ago, affordability is down in all regions. The West saw the biggest decline in affordability at 4.6 %, with the other regions are not far behind.
  • The rise in mortgage rates was modest this month, so purchases at this time are still favorable when you compare the locked-in monthly payment of a mortgage to the rise in rents. New home construction and an increase in inventory during a time of low rates could lead to more manageable price growth and more sales.
  • The FHA has agreed to eliminate the pre-payment penalties, a positive change for borrowers that pay off their mortgage, starting in 2015.

What does housing affordability look like in your market? View the full data release here.

The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principle and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

Source: NAR, Economists’ Outlook Blog 091514

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Author: Kenneth Bargers

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