Economists' Outlook

Housing stats and analysis from NAR's research experts.

Housing Affordability Modestly up in November 2019

At the national level, housing affordability conditions improved in November 2019 compared to last a year ago and modestly rose compared to October, according to NAR’s Housing Affordability Index. Median home prices rose 5.4% in November from one year ago.1 The effective 30-year fixed mortgage rate2 also slightly rose to 3.75% this November from 3.74% in October although mortgage rates are still lower compared to the year-ago level of 4.99%.

Bar chart: November Housing Affordability in 2019 and 2018

As of November 2019, 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 209.2 (median family income of $78,641 is almost twice the qualifying income of $37,584). The least affordable region remained the West, where the index was 116.1 (median family income of $85,563 is 1.16x the qualifying income of $73,728). For comparison, the index was 170.5 in the South (median family income of $72,766 is 1.70x the qualifying income of $42,672) and 168.1 in the Northeast (median family income of $90,452 is 1.68x the qualifying income of $53,808).

Housing affordability3  increased from a year ago in all four regions. However, with home prices rising faster than income, affordability is down from last month in three of the four regions.

Nationally, mortgage rates were down 124 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in November in the US was $274,000 up 5.4% from a year ago, while median family incomes rose 3.7 % in 2019 from one year ago.
Bar chart: U.S. and Regional Incomes in 2019 and 2018

With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.3% this November from 17.4% from a year ago, based on a 20% down payment and 30-year fixed-rate mortgage. Regionally, the West has the highest mortgage payment to income share at 21.5% of income. The Northeast had the second highest share at 14.9% followed by the South at 14.7%. The Midwest had the lowest mortgage payment as a percentage of income at 11.9%.

Line graph: Payment as a Percent of Income November 2018 to November 2019

During the week of January 17, 2020, the MBA reported mortgage applications increased 38.7% compared to December 2018. Inventory levels will benefit from an increase in new home construction. This will help potential homebuyers who are seeing prices move faster than incomes.

What does housing affordability look like in your market? See 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 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).

2 Based on preliminary figures for the month.

3Starting 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.

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