Housing affordability fell to 3-decade low, but it's not all bad
Housing affordability in the U.S. has fallen to its lowest level since 1989, as both mortgage rates and home prices have surged, while income growth crawls at
Housing affordability in the U.S. has fallen to its lowest level since 1989, as both mortgage rates and home prices have surged, while income growth crawls at a much slower place.
For the first time, median home prices have eclipsed $400,000, landing at $440,300 in the second quarter of 2022, according to data from the Federal Reserve Bank of St. Louis.
Meanwhile, 30-year fixed mortgage rates were 5.60% in June, compared with 3.03% just one year ago. That increase is due in part to the Federal Reserve's decision to raise its key interest rate — which has happened four times so far this year — as it seeks to fight spiraling inflation.
The National Association of Realtors (NAR) defines a qualifying income, or the income necessary to afford a mortgage, as being one that allows a homeowner to put no more than 25% of family income toward the monthly payment for a 30-year fixed mortgage loan, including a 20% down payment.
Today, the association says a qualifying annual income in the U.S. is $93,312. While a monthly mortgage payment climbed 53.7% over the past year, median family incomes rose by just 5.8%, it said.