October 2016 Housing Affordability Index

At the national level, housing affordability is up from a year ago for the fourth consecutive month. Mortgage rates dipped and stood at 3.76 this October but they are already higher for current home shoppers.

  • Housing affordability increased from a year ago in October moving the index up 0.5 percent from 169.4 to 170.2. The median sales price for a single family home sold in October in the US was $233,700 up 5.9 percent from a year ago.
  • Nationally, mortgage rates were down 29 basis points from one year ago (one percentage point equals 100 basis points) while incomes rose 2.7 percent.
  • Regionally, the West had the biggest increase in price at 7.6 percent. The South had an increase of 6.9 percent while the Midwest had a 5.7 percent gain in price. The Northeast had the smallest increase of 2.8 percent.
  • Regionally, two of the four regions saw increases in affordability from a year ago. The Northeast had the biggest increase of 3.5 percent. The Midwest had a modest increase of 0.8 percent. The South had a decline in affordability of 1.8 percent while the West had a decline of 0.5 percent.
  • By region, affordability is up in all regions from last month. The Midwest had the biggest increase of 3.8 percent. The Northeast followed with a gain of 3.2 percent and the South had a gain of 2.6 percent. The West had the smallest increase in affordability of 0.3 percent.
  • Despite month to month changes, the most affordable region is the Midwest where the index is 216.9. The least affordable region remains the West where the index is 120.4.  For comparison, the index is 173.5 in the South, 178.5 in the Northeast.
  • Mortgage applications are currently down this week and while rates remain low from a broad historical perspective, they have increased notably from the lows seen as recently as just before the election period. These housing affordability numbers reflect those lower mortgage rates, but we can expect to see these higher mortgage rates dampen housing affordability in the months ahead. Job creation is steady and will help stabilize consumer confidence going forward. More inventory and new home creation will help tame home prices which are still growing faster than incomes.
  • 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 (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

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  1. While housing affordability remains strong, it also is contributing to a shortage of inventory on our local MLS. Without more appreciation, many potential sellers not finding much motivation to go ahead and put their house on the market, unless they need to move out of the area or into a retirement community.