Economists' Outlook

Housing stats and analysis from NAR's research experts.

September 2019 Housing Affordability Index

At the national level, housing affordability conditions improved in September 2019 compared to last month and a year ago, according to NAR’s Housing Affordability Index. Even as housing prices continued to increase, affordability improved due to lower mortgage rates. The effective 30-year fixed mortgage rate1 declined to 3.65% this September from 4.77% a year ago.

Bar chart: September Housing Affordability 2018 and 2019
  • As of September 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. Housing affordability increased from a year ago in September, moving the index2 up 11.5% from 147.4 to 164.3. The most affordable region was the Midwest, with an index value of 206.9. The least affordable region remained the West, where the index was 118.7. For comparison, the index was 169.5 in the South, and 169.4 in the Northeast.
  • From one year ago, all four regions saw a double-digit increase in affordability. The West had the biggest gain in affordability of 12.1%, followed by the South with a gain of 11.7%. The Northeast and Midwest had the smallest gain of 11.2%.
  • From the prior month, affordability improved in all four regions. The Northeast had the biggest gain of 5.6% followed by the Midwest with an increase of 4.7%. The South and the West regions both rose 1.6%.
  • Nationally, mortgage rates were down 112 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in September in the US was $275,100, up 6.1% from a year ago, while median family incomes rose 3.5 % in 2019 from one year ago.
Bar chart: U.S. and Regional Incomes
  • With lower mortgage rates, the payment as a percentage of income was down from last month, at 15.2% this September and 17% from a year ago. Regionally, the West has the highest mortgage payment to income share at 21.1% of income. The South and the Northeast together had the second-highest share at 14.8%. The Midwest had the lowest mortgage payment as a percentage of income at 12.1%.
Line graph: Payment as Percent of Income
  • First-time buyers are coming into the market and historically low rates are helping. Buyer interesting is rising. This week the MBA reported mortgage applications for new home purchases recently increased 31.5% from a year ago and 5% from September 2019. Housing starts and permits are inclining and new home sales will help ease price growth having a positive impact on affordability. Rents are rising to 4%.
  • What does housing affordability look like in your market? See the full data release.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent 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. 

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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