Housing Affordability Conditions Improve in November 2023

At the national level, housing affordability rose in November compared to the previous month, according to NAR's Housing Affordability Index. The monthly mortgage payment decreased by 2.7% compared to the prior month, while the median price of single-family homes declined by 1.0%. The monthly mortgage payment decreased by $61 from last month.

Compared to one year ago, affordability fell in November as the monthly mortgage payment climbed 10.3% and median family income rose by 2.1%. The effective 30-year fixed mortgage rate¹ was 7.52% this October compared to 6.89% one year ago. Nationally, mortgage rates were up 72 basis points from one year ago (one percentage point equals 100 basis points). Mortgage rates moved above 7% for the fourth time since July 2001. The median existing-home sales price rose 3.6% from ($392,200) compared to one year ago ($378,700).

The national index is currently below 100, which means that the typical family with a median income had less than the income required to afford a median-priced home. The income required to afford a mortgage, or the qualifying income is the income needed so that mortgage payments on a 30-year fixed mortgage loan with a 20% down payment account for 25% of family income. The most affordable region was the Midwest, with an index value of 127.5 (median family income of $97,031 with a qualifying income of $76,128). The least affordable region remained the West, where the index was 65.2 (median family income of $108,411 and a qualifying income of $166,368). The South was the second most affordable region with an index of 94.9 (median family income of $91,500 and a qualifying income of $96,384). The Northeast was the second most unaffordable region with an index of 95.4 (median family income of $111,452 with a qualifying income of $116,880).

A mortgage is affordable if the mortgage payment (principal and interest) amounts to 25% or less of the family's income.

Housing affordability declined in all four regions from a year ago. The Northeast region had the biggest decline, at 11.7%, followed by the Midwest, with a dip of 8.7%. The South experienced a weakening in price growth of 7.7%, followed by the West, which fell 6.3%.

Affordability fell in all four regions from last month. The West region had the biggest dip, 9.1%, followed by the Midwest with a decline of 3.2%. The Northeast region decreased 8.1%, followed by the South region, which had the smallest drop of 6.7%.

Compared to one year ago, the monthly mortgage payment rose to $2,198 from $1,993, an increase of 10.3% or $205. The annual mortgage payment as a percentage of income inclined to 26.5% this November from 24.5% from a year ago. Regionally, the West has the highest mortgage payment to income share at 38.4% of income. The South had the second highest share at 26.3%, followed by the Northeast with their share at 26.2%. The Midwest had the lowest mortgage payment as a percentage of income at 19.6%.

Last week, the Mortgage Bankers Association reported new home purchase applications increased 22.2% from a year ago. Mortgage rates seem to be on a downward trend. Home price growth has slowed down, and these two factors have helped monthly mortgage payments come down. New home construction will help add some inventory to the housing market, which should help tame price growth.

Read the data release.

The Housing Affordability Index calculation assumes a 20% down payment and a 25% qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation.

¹ Starting in May 2019, FHFA discontinued the release of several mortgage rates and only published an adjustable rate mortgage called PMMS+ based on Freddie Mac Primary Mortgage Market Survey. With these changes, NAR discontinued the release of the HAI Composite Index (based on 30-year fixed rate and ARM) and starting in May 2019 only releases the HAI based on a 30-year mortgage. NAR calculates the 30-year effective fixed rate based on Freddie Mac's 30-year fixed mortgage contract rate, 30-year fixed mortgage points and fees, and a median loan value based on the NAR median price and a 20% down payment.