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April 2016 Housing Affordability Index

At the national level, housing affordability is down from a year ago as higher prices continue to outpace household income growth. Modestly lower rates and income growth have helped reduce the burden of higher home prices, but are not able to completely offset them causing a slip in affordability.

Housing affordability declined from a year ago in April pushing the index from 167.5 to 162.4. The median sales price for a single family home sold in April in the US was $233,700 up 6.3 percent from a year ago.

  • Nationally, mortgage rates were down 6 basis points from one year ago (one percentage point equals 100 basis points) while incomes rose approximately 2.3 percent.
  • Regionally, all four regions saw declines in affordability from a year ago. The Midwest had the largest decline of 5.6 percent. The South had a decline in the affordability index of 3.4 percent followed by the West with 2.0 percent. The Northeast had the smallest dip in affordability at 1.0 percent.
  • The Midwest had the biggest increase in price at 7.6 percent. The South and the West both experienced a significant increase in prices of 6.5 percent. The Northeast has the smallest gain of 3.9 percent.
  • By region, affordability is down in all regions from last month. The Midwest (6.2 percent) had the biggest decline. The South and West had a decline of 4.6 percent and 4.3 percent. The Northeast had the smallest decline in affordability of 3.4 percent.
  • Despite month to month changes, the most affordable region is the Midwest where the index is 202.0. The least affordable region remains the West where the index is 119.8.  For comparison, the index is 167.8 in the South, 165.0 in the Northeast.
  • Currently mortgage applications are up and rates have not made the jump as expected. A shortage of inventory is having an impact on sales across many metro markets. New homes construction would support this inventory issue; builders continue to face difficulty in securing permits for condos and single family homes, but have less trouble securing them for apartments.
  • 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.

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Affordability

 

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