By Alice Seeley
Housing affordability in America has fallen to its lowest level since 1989, according to the newest data from the National Association of Realtors (NAR).
The Association’s housing affordability index, calculated using median single-family home prices, mortgage rates, and median family incomes, dropped by 3.6% to 98.5 in June. The index has been steadily declining since October when it was 149.4, and existing-home sales have declined for five months straight. This is a 32.2% decrease from June 2021.
According to the Wall Street Journal, this is the worst monthly score on the index since 1989. For the first time in the history of the NAR, the median price of a single-family home has passed $400,0000. Since August 2021, the median price of a single-family house rose by 14.2% to $413,500. This is a $7,900 increase from the previous month.
“Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers,” the NAR’s Chief Economist, Lawrence Yun, commented. “Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief. The recent dips in mortgage rates will bring additional buyers to market, especially in those places where home prices are still relatively affordable and where jobs are being added.”
This decline in affordability was caused primarily by high mortgage rates and expensive home prices. The average mortgage payment rose to $1,944 in June, a 33% increase from January. The NAR’s data showed that the average American family spends almost 25% of their income on mortgage payments. Currently, houses are the least affordable in the West, with a 69.6 score on the index, followed by the South (99.3), Northeast (102.3), and Midwest (132.3).
