Economists' Outlook

Housing stats and analysis from NAR's research experts.

Housing Affordability Conditions Weaken in September 2022 as Mortgage Rates Escalate

At the national level, housing affordability fell in September compared to the previous month, according to NAR's Housing Affordability Index. Compared to the prior month, the monthly mortgage payment increased by 8.0% while the median family income increased by 0.6%, making home buying less affordable in September. The monthly mortgage payment increased by $142 from last month.

Compared to one year ago, affordability fell in September as the monthly mortgage payment climbed 57.8% and median family income rose by 3.9%. The effective 30-year fixed mortgage rate1 was 6.18% this September compared to 2.95% one year ago, and the median existing-home sales price rose 8.1% from one year ago. Mortgage rates this September were the highest since November 2008, when the rate was 6.18%. For comparison, the median home price was $266,700, and the monthly payment was $1,304, with the payment at a percentage of income at 21.8%.

In September, potential home buyers must make $3,083 more than the median family income ($88,693) to qualify for a home.
Line graph: Housing Affordability Index, September 2021 to September 2022
Bar graph: Mortgage Rates, September 2021 to September 2022

As of September 2022, the national index was below 100, which means that the typical family can no longer afford to buy the median-priced home. An index below 100 means that a family with a median income had less than the income required to afford a median-priced home. The income necessary to afford a mortgage, or the qualifying income, is the income needed so that mortgage payments on a 30-year fixed mortgage loan with a 20% down payment account for 25% of family income.2 The most affordable region was the Midwest, with an index value of 130.4 (median family income of $87,207 with a qualifying income of $66,864). The least affordable region remained the West, where the index was 67.6 (median family income of $96,636 and the qualifying income of $143,040). The Northeast was the second most affordable region with an index of 100.0 (median family income of $100,608 and the qualifying income of $100,608). The South was the second most unaffordable region with an index of 96.5 (median family income of $81,297 with a qualifying income of $84,288).

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

Housing affordability4 had double-digit declines from a year ago in all four regions. The South had the most significant decline of 36.0%. The Northeast experienced a weakening in price growth of 34.2%, followed by the Midwest, which fell 33.6%. The West had the smallest dip of 33.1%.

Affordability was down in all regions from last month. The South region fell 7.7%, followed by the Midwest with a decline of 7.3%. The West was down 7.0%, followed by the Northeast, which had the smallest decrease of 3.8%.

Nationally, mortgage rates were up 323 basis points from one year ago (one percentage point equals 100 basis points) from 2.95% to 6.18%.

Compared to one year ago, the monthly mortgage payment rose to $1,912 from $1,212, an increase of 57.8%. From a year ago, the monthly mortgage payment increased by $700. The annual mortgage payment as a percentage of income inclined to 25.9% this September from 17.0% a year ago. Regionally, the West has the highest mortgage payment to income share at 37.0% of income. The South had the second highest share at 25.9%, followed by the Northeast, with their share at 25.0%. The Midwest had the lowest mortgage payment as a percentage of income at 19.2%. 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, September 2021 to September 2022
Line graph: Median Family Income and Qualifying Income, September 2021 to September 2022
Line graph: Median Home Prices, September 2021 to September 2022

This week, the Mortgage Bankers Association released data showing that mortgage applications increased by 2.7% from one week earlier. Mortgage rates continue to climb and are reaching 7%. Higher mortgage rates and home prices make it more difficult for potential home buyers to qualify for home purchases. Incomes are having difficulty keeping pace with the housing market's growth.

Read the 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% 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 percent 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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