December 2016 Housing Affordability Index

At the national level, housing affordability is down from last month and down from a year ago. Mortgage rates increased to 4.15 percent this December, up dramatically from last month’s 3.82 percent, but roughly unchanged compared to 4.14 a year ago.

Housing affordability declined from a year ago in December moving the index down 1.4 percent from 165.1 to 162.8. The median sales price for a single family home sold in December in the US was $233,500 up 3.8 percent from a year ago.
Nationally, mortgage rates were up one basis point from one year ago (one percentage point equals 100 basis points) while incomes rose 2.4 percent.
Regionally, the South had the biggest increase in price at 6.6 percent. The West had an increase of 6.3 percent while the Midwest had a 4.3 percent gain in price. The Northeast had the only decline in price of 5.6 percent.
Regionally, the Northeast was the only region that saw an increase in affordability from a year ago. The Northeast had an increase of 8.6 percent. The Midwest had the smallest decline of 2.1 percent. The West had a decline in affordability of 3.9 percent while the South had the largest decline of 4.4 percent.
By region, affordability is down from last month except in the Northeast. The Northeast had the only incline of 5.8 percent. The Midwest followed had a decline of 2.4 percent and the West had a decline of 3.3 percent. The South had the biggest decline in affordability of 4.4 percent.
Despite month-to-month changes, the most affordable region is the Midwest where the index is 210. The least affordable region remains the West where the index is 115.3. For comparison, the index is 161.5 in the South, 182.2 in the Northeast.
Mortgage applications are currently up this week. Home ownership rates are still historically low. Without the ramping up of new construction there will continue to be a housing shortage. Increases in population shows that there is clearly a demand for housing.
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.