At the national level, housing affordability conditions improved in February 2020 compared to last a year ago and rose compared to January, according to NAR’s Housing Affordability Index. Median home prices rose 8.1 % in February from one year ago. The effective 30-year fixed mortgage rate1 fell to 3.53% this February from 3.68% in January. Mortgage rates are historically now compared to the year-ago level of 4.60%.

Bar chart: February Housing Affordability by Region in 2020 and 2019

As of February 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 220.9 (median family income of $78,673 is almost twice the qualifying income of $35,616). The least affordable region remained the West, where the index was 119.9 (median family income of $85,788 and the qualifying income of $71,568). For comparison, the index was 176.0 in the South (median family income of $73,844 and the qualifying income of $41,952) and 179.0 in the Northeast (median family income of $91,585 with a qualifying income of $51,168).

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

Affordability is down in three of the four regions and is only up in the Northeast 8.4% from last month. The remaining regions had modest declines, the South had the largest decline of 0.8% followed by the West with a drop of 0.7%. The Midwest had the smallest drop of 0.6%.

Nationally, mortgage rates were down 107 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in February in the US was $273,600 up 8.1% from a year ago, while median family incomes rose 2.6 % in 2020 from one year ago.

Bar chart: U.S. and Regional Incomes in 2019 and 2020

With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 14.7% this February from 15.9% from a year ago. Regionally, the West has the highest mortgage payment to income share at 20.9% of income. The South had the second highest share at 14.2% followed by the Northeast with their share at 14.0%. The Midwest had the lowest mortgage payment as a percentage of income at 11.3%.

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

This week the MBA reported mortgage applications decreased 17.9% compared to last week. Refinance applications also declined 19 percent from the previous week. Credit availability decreased in March which will make things more challenging for first time home buyers. The COVID-19 virus is having an impact on both home buyers and sellers. While some homeowners may have a change in heart in selling their home there has also been less competition for available listings for 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 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).

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