Housing Affordability Slips as Home Prices Continue to Surge
Home prices are continuing to rise faster than incomes and that prompted housing affordability to fall in October compared to September int here of the four major U.S. regions, NAR reports on its Economists’ Outlook blog.
Overall, the median sales price for a single-family home that sold in October was $273,600, up 6.2% from a year ago. The median family income, on the other hand, increased 3.3% from a year ago.
Still, with lower mortgage rates—down 114 basis points from one year ago and averaging 3.74% in October—the payment as a percentage of income dropped to 15.3% in October compared to 17% a year ago, NAR reports. The West has the highest mortgage payment-to-income share at 21.7% of income, the South at 14.8%, the Northeast at 14.7%, and the Midwest had the lowest mortgage payment as percentage of income at 12%.
The most affordable region in the U.S. in October was in the Midwest. The median family income of $78,249 in the Midwest is nearly twice the qualifying income of $37,584 (the qualifying income is the income needed so that mortgage payments comprise no more than 25% of a family’s income). On the other hand, the West remained the least affordable region in the nation. The median family income there of $85,136 is 1.15 times the qualifying income of $73,728.
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