Barriers to homeownership eased up in August as recent reports from the National Association of REALTORS® (NAR) showed signs of improved housing affordability nationally.
According to NAR’s Housing Affordability Index, August saw an increase in affordability, as the monthly mortgage payment fell by 1.1%—median family income also declined slightly, however.
The breakdown:
– August marks the second consecutive month of improved affordability.
– Monthly mortgage payments fell by 1.1%, while the median family income fell modestly by 0.7% in August.
– Year-over-year affordability declined as the monthly mortgage payment increased 13.9%, and the median family income rose by 3.9%.
– The 30-year fixed mortgage rate was 2.89% in August 2021 compared to 3.00% the year before.
– Monthly mortgage payment rose to $1,210 from $1,062 compared to a year ago, up 13.9%.
– Median existing-home sales price increased 15.6% from one year ago in August 2021.
– The Midwest was the most affordable region in August, while the West region was the least affordable.
What this means:
Affordability issues have plagued buyers in the market in 2021, as record-high home prices, lagging inventory and uncanny demand have created a frenzy that is finally cooling as Autumn gets into full swing.
As of August 2021, the national and regional indices were all above 100, which means that a family with the median income had more than the income required to afford a median-priced home.
“Mortgage rates have fallen in back-to-back months and are historically low below 3%,” wrote Michael Hyman, NAR research data specialist, who authored the report. “Home price growth has also slowed down, which is a good sign for first-time homebuyers who have been priced out of the market. As such, the income needed to afford a mortgage (qualifying incomes) has declined since June due to the seasonal decline in home prices and continued decline in mortgage rates.”
The Midwest was the most affordable region in August, recording an index value of 196.8. That equates to a median family income of $86,614, while the qualifying income to afford a mortgage was $44,016.
The West region was the least affordable region with an index of 114.9, a median family income of $94,372, and a qualifying income of $82,128.
The South and Northeast fell in the middle with an index of 160.6 and 149.1, respectively.
Year-over-year affordability took a hit, despite the monthly improvement as mortgage payments increased by nearly 14% in August 2021 compared with 2020.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
