Economists' Outlook

Housing stats and analysis from NAR's research experts.

Housing Affordability Falls as Mortgage Rates Climb in April

At the national level, housing affordability declined in April compared to the previous month according to NAR's Housing Affordability Index. Compared to the prior month, the monthly mortgage payment increased by 14.5% while the median family income increased modestly by 0.7%.

Compared to one year ago, affordability declined in April as the monthly mortgage payment climbed 45% and median family income rose by 2.5%. The effective 30-year fixed mortgage rate1 was 5.05% this April compared to 3.11% one year ago, and the median existing-home sales price rose 14.8% from one year ago.

Line graph: Housing Affordability Index, April 2021 to April 2022
Bar graph: Mortgage rates, April 2021 to April 2022

As of April 2022, the national and regional indices were all above 100, except in the West, where the index was 88.4. An index above 100 means 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 a 20% down payment account for 25% of family income.2 The most affordable region was the Midwest, with an index value of 150.3 (median family income of $88,711 with a qualifying income of $59,040). The least affordable region remained the West, where the index was 88.4 (median family income of $96,391 and the qualifying income of $109,008). This would be the second consecutive month that the West index was below 100. The South was the second most affordable region with an index of 109.8 (median family income of $82,314 and the qualifying income of $74,976). The Northeast was the second most unaffordable region with an index of 117.6 (median family income of $102,119 with a qualifying income of $86,832).

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.2

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

Housing affordability3 had double-digit declines from a year ago in all four regions. The South had the biggest decline of 33.5%. The Midwest and Northeast regions both experienced a weakening in price growth compared to a year ago of 25.2%. The West had the smallest dip of 21.5%.

Affordability was down in all regions from last month. The Midwest region fell 12.7% followed by the Northeast with a decline of 12.6%. The South was down 12.4% followed by the West which had the smallest decrease of 9%.

Nationally, mortgage rates were up 194 basis points from one year ago (one percentage point equals 100 basis points) from 3.11 to 5.05%.

Compared to one year ago, the monthly mortgage payment rose to $1,717 from $1,184, an increase of 45%. The annual mortgage payment as a percentage of income inclined to 22.9% this April from 16.2% a year ago due to higher home prices compared to modest gains in median family incomes. Regionally, the West has the highest mortgage payment to income share at 28.3% of income. The South had the second highest share at 22.8% followed by the Northeast with their share at 21.3%. The Midwest had the lowest mortgage payment as a percentage of income at 16.6%. 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, 2022 and 2021
Line graph: Monthly Mortgage Payments, April 2021 to April 2022
Line graph: Median Home Prices, April 2021 to April 2022

According to the Mortgage Bankers Association last week, mortgage applications increased 6.5% from one week earlier.5 The cost of purchasing a home continues to increase and become more difficult for all potential homeowners, especially first-time home buyers. Inflation is having an impact on the economy as a whole and the mortgage rate hikes are making affordability more difficult. Mortgage payments are rising fast and income growth cannot keep pace.

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% more than the level of income needed to 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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