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At the national level, housing affordability is down due to higher mortgage rates and prices though rates are set to stabilize for weeks to come. What is affordability like in your market?
- Housing affordability is down for the month of August in the U.S. as prices are up 14.4 percent from August 2012. The median home price is down from last month but August marks the strongest year-over-year price gain since October 2005.
- Mortgage rates are up slightly from last month and up 19.2% from a year ago. Job growth and less restriction to lending will bring more consumers back into the market.
- By region, affordability is down from one month ago in all regions, with the Northeast having the biggest drop. From one year ago, affordability is down in all regions. The West has had the largest price gain at 17.7 % while the Northeast had the smallest at 7.6%.
- Affordability may rise next month if the lower rates equalize home prices. The Fed’s decision to continue to purchase bonds will likely result in a break from rising mortgage rates. Home buyers will have a few more weeks to lock in lower rates as they are expected to continue to increase once the Fed scales back on those purchases.
- Check out the full data release here.
- The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principle and interest payment to income). See further details on the methodology and assumptions behind the calculation here.
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