Housing affordability remained challenged as of January, but there are better signs pointing to an uplift in the future, according to the latest National Association of REALTORS®’ (NAR) Housing Affordability Index.
NAR’s data saw the qualifying income needed to buy a home continue to rise for the fourth straight month, increasing by 0.84% to $103,104 in January (based on a 25% qualifying ratio for monthly housing expense to gross monthly income with a 20% down payment).
While this metric is high, it falls within the current median family income of $103,850. In addition, despite monthly payments seeing a slight increase from $2,130 to $2,148, the payment as a percentage of income ratio remained at 24.8%, not too far off from the 23% seen back in 2022.
The median priced existing single-family home also shrank in January, continuing to decrease for the third straight month. The metric fell 1.59% to $402,000, the lowest reported price since March 2024.
Despite some bettering signs, the average mortgage rate remains elevated. Mortgage rates saw an increase to 7.04% in January, up 24 basis points from December—breaking out of the high 6% range maintained since July 2024.
Regional look
The West continued to reign as one of the most affordability challenged regions in January. The median home registered at a whopping $626,100, coupled with a median family income of $112,078 versus a qualifying income of $160,608 needed to buy a home.
The Northeast also maintained its title as a highly affordability challenged region. The median home registered at $489,100 compared with a median family income of $112,842 versus a qualifying income of $125,472 to purchase a home.
On the other hand, both the South and the Midwest remained relatively affordable.
The South saw a median home price of $363,700, with a median family income of $96,346 versus a qualifying income of $93,312 needed to buy a home.
The Midwest saw a median home price of $293,000, and saw the biggest positive gap in incomes with a median family income of $100,883 versus a qualifying income of $75,168.
