At the national level, housing affordability fell in January compared to the previous month, according to NAR's Housing Affordability Index. Compared to the prior month, the monthly mortgage payment increased by 3.4% while the median family income rose modestly by 0.5%.

Compared to one year ago, affordability declined in January as the median family income fell by 4.5% while the monthly mortgage payment increased 27.0%. The effective 30-year fixed mortgage rate1 was 3.51% this January compared to 2.79% one year ago, and the median existing-home sales price rose 15.9% from one year ago.

Line graph: Housing Affordability Index, January 2021 to January 2022
Line graph: Median Family Income, January 2021 to January 2022

As of January 2022, 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 202.7 (median family income of $86,866 with the qualifying income of $42,864). The least affordable region remained the West, where the index was 106.8 (median family income of $94,386 and the qualifying income of $84,368). The South was the second most affordable region with an index of 145.4 (median family income of $80,603 and the qualifying income of $55,440). The Northeast was the second most unaffordable region with an index of 148.0 (median family income of $99,996 with a qualifying income of $67,584).

A home purchase was unaffordable for a typical first-time buyer intending to purchase a typical home. First-time buyers typically spent 25.6% of their family income on mortgage payments, making a home purchase unaffordable. A mortgage is affordable if the mortgage payment (principal and interest) amounts to 25% or less of the family's income.3

Bar graph: U.S. and Regional January Housing Affordability, 2022 and 2021
Bar graph: U.S. and Regional Median Family Income and Qualifying Income

Housing affordability4 declined from a year ago in all the four regions. The South had the biggest decline of 24.3%. The West region experienced a weakening in price growth compared to a year ago (16.4%). The Midwest fell 16.3% followed by the Northeast which had the smallest dip at 14.5%.

Affordability was also down in all regions from last month. The West region fell 3.7% followed by the Northeast with a decline of 3.5%. The South was down 2.2% followed by the Midwest which had the smallest decrease of 0.4%.

Nationally, mortgage rates were up 72 basis point from one year ago (one percentage point equals 100 basis points) from 2.79 to 3.51%.

Compared to one year ago, the monthly mortgage payment rose to $1,284 from $1,011, an increase of 22.5%. The annual mortgage payment as a percentage of income increased to 17.5% this January from 13.6% from a year ago due to higher home prices and declines in median family incomes. Regionally, the West has the highest mortgage payment to income share at 23.4% of income. The South had the second highest share at 17.2% followed by the Northeast with their share at 16.9%. The Midwest had the lowest mortgage payment as a percentage of income at 12.3%. Mortgage payments are not burdensome if they are no more than 25% of income.5

Bar graph: U.S. and Regional Mortgage Payment as Percent of Income, 2022 and 2021
Line graph: Monthly Mortgage Payments, January 2021 to January 2022

According to the Mortgage Bankers Association this week, mortgage applications increased 8.5% from one week earlier. Credit availability is currently up. First-time home buyers are seeing mortgage rates rise which is making the cost to own spike. Incomes have taken a dive while home prices have continued to show double digit price growth. Housing inventory is at an all-time low and an incline is much needed to stabilize the market.


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% down payment.

2 Housing costs are burdensome if they take up more than 30% of income. The 25% share of mortgage payment to income takes into account that homeowners have additional expenses such as mortgage insurance, home insurance, taxes, and expenses for property maintenance.

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% more than the level of income needed pay the mortgage on a median-priced home, assuming a 20% down payment so that the monthly payment and interest will not exceed 25% of this level of income (qualifying income).

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

5 The Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae's AllRegs® Market Clarity® business information tool. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.

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