At the national level, housing affordability is down due to higher home prices even though mortgage rates have come down. What is affordability like in your market?
- Housing affordability is down for the month of May in the US as prices reach their highest level since July of 2008. Mortgage rates, as measured by the FHFA monthly survey based on May home sales closing, ticked down a notch this month, easing the pressure on May affordability.
- While mortgage rates are still lower than a year ago and incomes are higher, home prices increased again bringing affordability down. Additionally, because mortgage rates began a swift rise in early May from record low levels, this is likely the last month that they provide a boost to affordability from the previous month or year even though they remain at historically low levels.
- By region, affordability is down from one month ago in all regions, with the South seeing the biggest drop. From one year ago, affordability is down in all regions, with the West seeing the biggest drop in affordability due to the largest price gain (19.5%).
- While affordability will certainly weaken in the months ahead, it is coming down from such a high level that affordability should remain historically favorable in spite of mortgage rate and continued price increases on the horizon.
- Check out 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.