October Housing Affordability Index

At the national level, housing affordability is down from a year ago and up for the month of October as both mortgage rates and home prices declined modestly.

•Housing affordability is down from a year ago in October as the median price for a single family home in the US is up from a year ago. Regionally, the West had the biggest increase in price at 8.3 percent while the Northeast experienced the slowest price growth at 1.5 percent. The Midwest had a price gain of 5.7 percent while the South had a price gain of 6.4 percent.

•The median single-family home price is $221,200 up 6.3 percent from October 2014. October’s mortgage rate is 4.05, down 24 basis points (one percentage point equals 100 basis points) from last year. Nationally, affordability is down from 168.6 in October 2014 to 166.3 in October 2015.

•Affordability is up from one month ago in all regions, and the Northeast had the largest jump of 4.4 percent while the West was flat at 0.6 percent. From one year ago, affordability is up in the Northeast 3.1 percent but down in all other regions. The West saw the biggest decline in affordability at 2.4 percent and the South had the smallest decline of 0.9 percent.

•Despite month to month changes, the most affordable region is the Midwest where the index is 209.9. The index is 176.0 in the South, 169.6 in the Northeast, and 119.8 in the West. For example, it is very easy to buy a home in Indianapolis and Cincinnati.

•Some markets are seeing dips in affordability due to prices outpacing incomes and previous unhealthy price gains. This maybe a favorable time for those who want to get into the market as home price growth slows and mortgage rates remain low.  Return buyers can discover opportunities to use equity to position themselves to make another home purchase. If home prices continue to mature at 5 percent growth rate next by October next year, the median home price could be around $224,000. With mortgage rates expected to rise to the 4 percent range and fewer properties to choose from the cost of purchasing a home could become more expensive.

•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.