At the national level, housing affordability is down due to higher home prices even though mortgage rates are still historically low. What is affordability like in your market?
- Housing affordability is down for the month of June in the U.S. as prices reach their highest level since August of 2007. Mortgage rates, as measured by the FHFA monthly survey based on June home sales closing, ticked up a notch this month, bringing down affordability in June.
- Mortgage rates are still lower than a year ago and incomes are higher, but with inventory shrinking that will cause prices to increase which will continue to bring affordability down.
- By region, affordability is down from one month ago in all regions, with the Midwest seeing the biggest drop. From one year ago, affordability is down in all regions. The West had the biggest drop in affordability because it had the biggest price gain at 18.5%.
- Affordability will probably decline again next month as the rise in mortgage rates affects July closings. Affordability could strengthen in the months beyond that, if prices retreat from their seasonal peak enough to offset higher mortgage rates. However, if many buyers are looking to buy now to lock in historically low mortgage rates before they rise further, prices may not retreat as much as is typical. While affordability is down from its recent record highs, this June marks the 3rd most affordable June on record since the index was started in 1971.
- 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.