June 2016 Housing Affordability Index

At the national level, housing affordability is down from a year ago as home price growth distresses affordability. Inventory levels are low and are putting pressure on home prices despite another month of declining mortgage rates.

Housing affordability declined from a year ago in June pushing the index from 154.8 to 153.3. The median sales price for a single family home sold in June in the US was $249,800 up 5.0 percent from a year ago.
Nationally, mortgage rates were down 15 basis points from one year ago (one percentage point equals 100 basis points) while incomes modestly rose approximately 2.1 percent.
Regionally, all regions saw declines in affordability from a year ago except the Northeast. The Northeast had an increase of 2.4 percent benefiting from only a slight gain in home prices. The Midwest had the largest decline in affordability of 3.4 percent. The South had a decline in the affordability index of 1.4 percent followed by the West with 1.1 percent.
The West had the biggest increase in price at 6.9 percent. The Midwest had an increase of 5.8 percent while the South had a 5.6 percent gain in price. The Northeast had the smallest increase of 1.5 percent.
By region, affordability is down in all regions from last month. The Northeast (5.7 percent) had the biggest decline. The Midwest and South had a decline of 5.5 percent and 3.3 percent. The West had the smallest decline in affordability of 1.7 percent.
Despite month to month changes, the most affordable region is the Midwest where the index is 186.8. The least affordable region remains the West where the index is 114.8. For comparison, the index is 157.9 in the South, 154.9 in the Northeast.
Mortgage applications picked up this week while rates remain low. Median family incomes are still not keeping pace of increasing home prices. Rents are up more than 3 percent which matches the highs of 2008. Lending standards are easing which can help encourage first time buyers to get involved in the housing market. Purchase mortgage applications remain notably higher than one year ago (see chart).
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.