Another Dip in Home Affordability, But...

September 16, 2014

Housing affordability nationwide creeped lower once again, as home prices continue to outpace incomes, according to the National Association of REALTORS®' Monthly Housing Affordability Index. Nevertheless, price gains are slowing and mortgage rates are hovering near yearly lows, which is helping to keep homes more affordable to the average family.

The median single-family home price in July was $223,900, rising 5.1 percent year-over-year.

Affordability in July fell from the previous month in all regions, excluding the Midwest. NAR researchers note that the Midwest was the only region to experience a slight gain in affordability because of lower home prices and qualifying incomes.

However, affordability has fallen from year-ago levels in all regions, with the West seeing the largest decline — 4.6 percent.

"The rise in mortgage rates was modest this month, so purchases at this time are still favorable when you compare the locked-in monthly payment of a mortgage to the rise in rents," according to NAR's affordability analysis. "New-home construction and an increase in inventory during a time of low rates could lead to more manageable price growth and more sales."

Source: “The Latest Housing Affordability Index Data,” National Association of REALTORS® Economists’ Outlook Blog (Sept. 15, 2014)