Housing Affordability Weakens as Prices Surge

October 13, 2020

Housing affordability declined in August compared to a year ago, despite median incomes rising. However, the jump in home prices—up 11.7%—was way above family income increases of 2.2%, the National Association of REALTORS® reports.

Mortgage rates are helping to offset some of those high home prices, however. A 30-year fixed-rate mortgage dropped to 3% in August and has averaged below 3% in the past few weeks, the lowest on record.

National and regional indices measuring housing affordability were all above 100 in August, which indicates that a family with the median income had more than the income required to afford a median-priced home, NAR reports.

The most affordable region of the United States is the Midwest, where the median family income of $79,570 is nearly double the qualifying income—$40,320—needed to buy a home.

On the other hand, the least affordable region remains the West, where the median family income of $86,744 compares with a qualifying income of $75,072 to purchase a home.

Qualifying vs median income chart. Visit source link at the end of this article for more information.

© National Association of REALTORS®

Still, affordability was down in all four of the major regions of the U.S. last month. The Northeast saw the largest decline: 5.8%.

The median sales price for a single-family home that sold in August was $315,000—up 11.7% from a year ago.

But even with lower mortgage rates, the percent of income increased. The mortgage payment as a percent of income was 15.7% nationally in August.

View NAR’s full data release to see housing affordability in your area.


Housing Affordability Weakens in August 2020 as Home Prices Rose Faster Than Median Family Incomes,” National Association of REALTORS® Economists’ Outlook blog (Oct. 9, 2020)