July 2019 Housing Affordability Index

At the national level, housing affordability is up from last month and up from a year ago. The effective 30-year fixed mortgage rate¹ was down from last month at 3.62% this July, and down nearly one percentage point compared to 4.75% a year ago.

• Housing affordability increased from a year ago in July, moving the index² up 13.6% from 140.3 to 159.4. All four regions saw an increase in affordability from a year ago. The Northeast had the biggest gain in affordability of 18.1%, followed by the West with a gain of 13.8%. The South had an increase of 13.5%, followed by the Midwest with the smallest gain of 10.7%.
• On a monthly basis, affordability is up from last month in all four regions. The Northeast had the biggest gain of 8.8% followed by the Midwest with an increase of 4.7%. The South region rose 4.1% followed by the West with the smallest incline of 4.0%.
• As of July 2019, the most affordable region was the Midwest, with an index value of 195.3. The least affordable region remained the West, where the index was 117.6. For comparison, the index was 163.8 in the South, and 167.8 in the Northeast.
• Nationally, mortgage rates were down 113 basis point from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in July in the US was $284,000, up 4.5% from a year ago, while median family incomes rose 3.7 % in 2019 from one year ago.

• Payment as a percentage of income was down from last month, at 15.7% this July and 17.8% from a year ago. Regionally, the West has the highest payment at 21.3% of income. The South had the second highest payment at 15.3% followed by the Northeast at 14.9%. The Midwest had the lowest payment as a percentage of income at 12.8%.

• Mortgage applications recently increased 33% from a year ago but were down 0.2% from July 2019. With improving affordability conditions, new home sales increased in August with an increase in housing starts. Homes are currently affordable due to low mortgage rates and because the job market is performing well, but home prices are currently outpacing incomes.
• What does housing affordability look like in your market? View the full data release.
• The Housing Affordability Index calculation assumes a 20% down payment and a 25% qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation.

¹ Starting in May 2019, FHFA discontinued the release of several mortgage rates and only published an adjustable rate mortgage called PMMS+ based on Freddie Mac Primary Mortgage Market Survey. With these changes, NAR discontinued the release of the HAI Composite Index (based on 30-year fixed rate and ARM) and starting in May 2019 only releases the HAI based on a 30-year mortgage. NAR calculates the 30-year effective fixed rate based on Freddie Mac's 30-year fixed mortgage contract rate, 30-year fixed mortgage points and fees, and a median loan value based on the NAR median price and a 20 percent down payment.

² A Home Affordability Index (HAI) value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).