As the summer housing market is heats up, it appears that affordability melted for many homebuyers in May, according to the latest National Association of Realtors®’ (NAR) Housing Affordability Index.
NAR’s data saw the qualifying income needed to buy a home increase by 3.3% to $108,192 in May (based on a 25% qualifying ratio for monthly housing expense to gross monthly income with a 20% down payment). This is the highest qualifying income reported since July 2024’s $108,384.
This qualifying income outpaced the median family income of $105,204, which also hasn’t occurred since July 2024. In addition, monthly payments saw a slight increase from $2,182 to $2,254, while the payment as a percentage of income ratio remained at 25.7%, the highest percentage seen since November 2024.
The median-priced existing single-family home also grew for the fourth straight month, rising 2.34% to $427,800, the highest price seen since June 2024.
Given this data, the affordability index in May registered at 97.2, dropping below 100 for the first time since November 2024 (a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home).
The Regional Breakdown
The West continues its reign as one of the most affordability challenged regions. The median home registered at a whopping $647,600, coupled with a median family income of $113,539 versus a qualifying income of $163,776 needed to buy a home. Mortgage payments sit at $3,412, 36.1% of buyers’ incomes. The West is at a deep low of 69.3 on the affordability index.
The Northeast also remained an affordability challenged region. The median home registered at $524,700 compared with a median family income of $114,313 versus a qualifying income of $132,720 to purchase a home. Mortgage payments registered at $2,765, 29% of incomes. The Northeast rests at a low 86.1 on the affordability index.
On the other hand, both the South and the Midwest remained relatively affordable.
The South saw a median home price of $374,700, with a median family income of $97,602 versus a qualifying income of $94,752 needed to buy a home. Mortgage payments of $1,974 are 24.3% of incomes. The South is just north of 100 on the affordability index, resting at 103.
The Midwest saw a median home price of $329,300, and again saw the most positive outlook in terms of income, with a median family income of $102,199 versus a qualifying income of $83,280. Mortgage payments of $1,735 are only 20.4% of incomes. The Midwest sits at a healthy 122.7 on the affordability index.
