Economists' Outlook

Housing stats and analysis from NAR's research experts.

Housing Affordability Conditions Unchanged in September

At the national level, housing affordability was flat in September compared to the previous month according to NAR's Housing Affordability Index. Compared to the prior month, the monthly mortgage payment fell by 0.7% while the median family income fell modestly by 0.6%.

Compared to one year ago, affordability declined in September as the median family incomes rose by 2.7% while the monthly mortgage payment increased 13.8%. The effective 30-year fixed mortgage rate1 was 2.95% this September compared to 2.95% one year ago, and the median existing-home sales price rose 13.8% from one year ago.

Line graph: Housing Affordability Index, September 2020 to September 2021
Line graph: Median Family Income, September 2020 to September 2021

As of September 2021, the national and regional indices were all above 100, meaning that a family with the median income had more than the income required to afford a median-priced home. The income required to afford a mortgage, or the qualifying income, is the income needed so that mortgage payments on a 30-year fixed mortgage loan with 20% down payment account for 25% of family income.2 The most affordable region was the Midwest, with an index value of 199.4 (median family income of $86,056 with the qualifying income of $43,152). The least affordable region remained the West, where the index was 113.6 (median family income of $93,764 and the qualifying income of $82,512). The South was the second most affordable region with an index of 156.7 (median family income of $79,664 and the qualifying income of $50,832). The Northeast was the second most unaffordable region with an index of 154.8 (median family income of $98,647 with a qualifying income of $63,744).

Bar graph: U.S. and Regional Housing Affordability, 2021 and 2020
Bar graph: U.S. and Regional Median Family Income and Qualifying Income

Housing affordability3 declined from a year ago in all four regions. The South had the biggest decline of 10.9%. The Northeast region experienced a weakening in price growth compared to a year ago of 6.5% followed by the Midwest with a dip of 6.0%. The West had the smallest decrease of 4.7%.

Affordability is up in two of the four regions from last month. The Northeast had the biggest gain of 3.8% followed by the Midwest which rose 0.8%. The South region fell 1.3% followed by the West, which had the smallest decrease of 1.0%.

Nationally, mortgage rates were flat — 0 basis points from one year ago (one percentage point equals 100 basis points).

Compared to one year ago, the monthly mortgage payment rose to $1,205 from $1,059, an increase of 13.8%. The annual mortgage payment as a percentage of income increased to 16.6% this September from 14.9% from a year ago due to higher home prices and only modest gains in median family incomes. Regionally, the West has the highest mortgage payment-to-income share at 22.0 % of income. The Northeast had the second highest share at 16.2%, followed by the South with their share at 16.0%. The Midwest had the lowest mortgage payment as a percentage of income at 12.5%. Mortgage payments are not burdensome if they are no more than 25% of income.4

Bar graph: U.S. and Regional Mortgage Payment as Percent of Income, 2021 and 2020
Line graph: Monthly Mortgage Payments, September 2020 to September 2021

This week the MBA reported mortgage applications increased 5.5% from a week earlier. Mortgage rates are currently below 3%, which allows borrowers to lend close to historical lows. Incomes are growing 2.7% while home prices are growing 13.8%, which is currently hurting affordability. Home price appreciation is slowing while qualifying incomes are falling, which will help potential home buyers.

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

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


1 Starting in May 2019, FHFA discontinued the release of several mortgage rates and only published an adjustable rate mortgage called PMMS+ based on Freddie Mac Primary Mortgage Market Survey. With these changes, NAR discontinued the release of the HAI Composite Index (based on 30-year fixed rate and ARM) and starting in May 2019 only releases the HAI based on a 30-year mortgage. NAR calculates the 30-year effective fixed rate based on Freddie Mac's 30-year fixed mortgage contract rate, 30-year fixed mortgage points and fees, and a median loan value based on the NAR median price and a 20 percent down payment.

2 The 25% mortgage payment to income share takes into consideration that a homeowner has other expenses such as property insurance, taxes, utilities, and maintenance, so that total housing expenses are no more than 30% of income. Housing costs are not burdensome if they account for no more than 30% of income.

3 A Home Affordability Index (HAI) value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).

4 Total housing costs that include mortgage payment, property taxes, maintenance, insurance, utilities are not considered burdensome of they account for no more than 30% of income.

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