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Housing Affordability Improved in August 2022 as Month-to-month Mortgage Funds Declined


On the nationwide stage, housing affordability improved in August in comparison with the earlier month, in keeping with NAR’s Housing Affordability Index. In comparison with the prior month, the month-to-month mortgage cost decreased by 4.4% whereas the median household revenue elevated by 0.3%, making house shopping for extra reasonably priced in August. Nonetheless, affordability continues to be considerably down from a 12 months in the past.

In comparison with one 12 months in the past, affordability fell in August because the month-to-month mortgage cost climbed 43.7% and median household revenue rose by 3.1%. The efficient 30-year fastened mortgage fee1 was 5.29% this August in comparison with 2.89% one 12 months in the past, and the median existing-home gross sales value rose 7.6% from one 12 months in the past.

Line graph: Housing Affordability Index, August 2021 through August 2022
Bar graph: Mortgage Rates August 2021 through August 2022

As of August 2022, the nationwide and regional indices had been all above 100, besides within the West, the place the index was 72.8. An index above 100 signifies that a household with a median revenue had greater than the revenue required to afford a median-priced house. The revenue required to afford a mortgage, or the qualifying revenue, is the revenue wanted in order that mortgage funds on a 30-year fastened mortgage mortgage with a 20% down cost account for 25% of household revenue.2 Essentially the most reasonably priced area was the Midwest, with an index worth of 139.5 (median household revenue of $86,696 with a qualifying revenue of $62,160). The least reasonably priced area remained the West, the place the index was 72.8 (median household revenue of $96,069 and the qualifying revenue of $132,048). The Northeast was the second most reasonably priced area with an index of 111.9 (median household revenue of $100,017 and the qualifying revenue of $89,376). The South was the second most unaffordable area with an index of 104.1 (median household revenue of $80,820 with a qualifying revenue of $77,664).

A mortgage is reasonably priced if the mortgage cost (principal and curiosity) quantities to 25% or much less of the household’s revenue.2

Bar graph: August Housing Affordability, 2022 and 2021
Bar graph: U.S. and Regional Median Family Income and Qualifying Income

Housing affordability3 had double-digit declines from a 12 months in the past in all 4 areas. The South had the largest decline of 31.0%. The Midwest and West each skilled a weakening in value progress of 27.7%. The Northeast had the smallest dip of 23.3%.

Affordability was up in all areas from final month. The Northeast area rose 10.5%, adopted by the Midwest with an incline of 4.1%. The West was up 4.0%, adopted by the South, which had the smallest improve of three.8%.

Nationally, mortgage charges had been up 240 foundation factors from one 12 months in the past (one proportion level equals 100 foundation factors) from 2.89% to five.29%.

In comparison with one 12 months in the past, the month-to-month mortgage cost rose to $1,759 from $1,224, a rise of 43.7%. The annual mortgage cost as a proportion of revenue inclined to 23.9% this August from 17.2% from a 12 months in the past—largely as a result of greater mortgage charges. Regionally, the West has the best mortgage-payment-to-income share at 34.4% of revenue. The South had the second-highest share at 24.0%, adopted by the Northeast with a share of twenty-two.3%. The Midwest had the bottom mortgage cost as a proportion of revenue at 17.9%. Mortgage funds aren’t burdensome if they’re not more than 25% of revenue.4

Bar graph: U.S. and Regional Mortgage Payment as Percent of Income, 2022 and 2021
Line graph: Monthly Mortgage Payments, August 2021 through August 2022
Line graph: Median Home Prices, August 2021 through August 2022

Final week, the Mortgage Bankers Affiliation launched knowledge displaying that mortgage functions decreased by 2% from one week earlier. Mortgage charges stay above 5% however have declined within the earlier two months. Month-to-month mortgage funds have additionally been on the decline in previous months, placing much less burden on incomes. House costs are nonetheless rising 7%, however the median household house value was below $400,000 for the primary time since March of this 12 months. A rise in housing stock and value declines in sure markets will assist potential householders enhance their possibilities of shopping for a house.

See the info launch.

The Housing Affordability Index calculation assumes a 20% down cost and a 25% qualifying ratio (principal and curiosity cost to revenue). See additional particulars on the methodology and assumptions behind the calculation.


1 Beginning in Could 2019, FHFA discontinued the discharge of a number of mortgage charges and solely printed an adjustable-rate mortgage known as PMMS+ primarily based on Freddie Mac Major Mortgage Market Survey. With these adjustments, NAR discontinued the discharge of the HAI Composite Index (primarily based on 30-year fastened fee and ARM) and beginning in Could 2019 solely releases the HAI primarily based on a 30-year mortgage. NAR calculates the 30-year efficient fastened fee primarily based on Freddie Mac’s 30-year fastened mortgage contract fee, 30-year fastened mortgage factors and charges, and a median mortgage worth primarily based on the NAR median value and a 20% down cost.

2 Housing prices are burdensome in the event that they take up greater than 30% of revenue. The 25% share of mortgage cost to revenue takes into consideration that householders have extra bills similar to mortgage insurance coverage, house insurance coverage, taxes, and bills for property upkeep.

3 A House Affordability Index (HAI) worth of 100 signifies that a household with the median revenue has precisely sufficient revenue to qualify for a mortgage on a median-priced house. An index of 120 signifies {that a} household incomes the median revenue has 20% greater than the extent of revenue wanted pay the mortgage on a median-priced house, assuming a 20% down cost in order that the month-to-month cost and curiosity won’t exceed 25% of this stage of revenue (qualifying revenue).

4 Complete housing prices that embrace mortgage cost, property taxes, upkeep, insurance coverage, and utilities aren’t thought-about burdensome in the event that they account for not more than 30% of revenue.

5 The Mortgage Bankers Affiliation (MBA) that analyzes knowledge from Ellie Mae’s AllRegs® Market Readability® enterprise data software. A decline within the MCAI signifies that lending requirements are tightening, whereas will increase within the index are indicative of loosening credit score.



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