At the national level, housing affordability remained promising in April 2020 compared to a year ago and rose compared to March, according to NAR’s Housing Affordability Index. Median home prices rose 7.3 % in April from one year ago. The effective 30-year fixed mortgage rate1 fell to 3.37% this April from 3.51% in March. Mortgage rates are historically now compared to the year-ago level of 4.30%.

Line graph: Housing Affordability Index April 2019 to April 2020

As of April 2020, 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 make up no more than 25% of family income. The most affordable region was the Midwest, with an index value of 210.8 (median family income of $82,571 which is more than twice the qualifying income of $39,168). The least affordable region remained the West, where the index was 125.4 (median family income of $90,016 and the qualifying income of $71,808). For comparison, the index was 180.0 in the South (median family income of $77,483 and the qualifying income of $43,056) and 181.8 in the Northeast (median family income of $96,098 with a qualifying income of $52,848).

Bar chart: U.S. and Regional Income/Qualifying Income

Housing affordability2 increased from a year ago in all four regions.

Affordability is up in all four regions from last month. The West had the largest incline of 9.0% followed by the South with a gain of 6.8%. The Northeast had an increase of 3.7% followed by the Midwest with the smallest incline of 3.2%.

Nationally, mortgage rates were down 93 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in April in the US was $288,700 up 7.3% from a year ago, while median family incomes jumped 7.0 % in 2020 from one year ago.

Bar chart: April Housing Affordability, 2020 and 2019

With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 14.6% this March from 16.3% from a year ago. Regionally, the West has the highest mortgage payment to income share at 19.9% of income. The South had the second highest share at 13.9% followed by the Northeast with their share at 13.7%. The Midwest had the lowest mortgage payment as a percentage of income at 11.9%.

Line graph: Payment as Percent of Income April 2019 to April 2020

This week the MBA reported mortgage applications increased 9.3% compared to last week. Refinance applications increased 61.3% from the previous week. Incomes have caught up with the pace of home price growth. There is still a high demand for homes during the spring season. Rates are still historically low and potential homeowners can take advantage of borrowing at a low rate. With some states opening back up do to the virus, more homes are likely to come back on the market.

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% down payment.

2 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).

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