At the national level, housing affordability is down slightly for the month due to a small gain in prices as rate gains remain low, causing affordability to be down for the year. What is affordability like in your market?
- Housing affordability was down for the month of December as the median price for a single family home in the US increased slightly by 1.3% from November. In spite of the decrease, the median single-family home price is $197,900 up 9.8 % rounding off the year with another year of strong price growth.
- Home prices remained high and mortgage rates are up 28.6% from last year, nationally, affordability is down from 204.4 in December 2012 to 168.1 in December 2013.
- Mortgage rates are expected to slow down before they gradually rise again. Income levels are up 1.7% from last year, upward movement in job gains should provide investment flexibility for 2014.
- By region, affordability is down from one month ago in all regions except the Northeast which had the only gain in affordability at 2.7%. It was the only region to experience a decline in home prices and mortgage rates. From one year ago, affordability is down in all regions. The West saw the biggest decline in affordability as a result of having the largest price gain at 15.1%.
- Mortgage rates are still expected to increase over the next few months but the raise may not be immediate. Consumer confidence needs to improve along with job gains and income growth. For a look at how the housing market might respond to a change in rates, I recommend this Stress Test by Chief Economist Lawrence Yun.
- What does housing affordability look like in your market? View 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.