Housing Affordability Down In May Across The Nation

Housing affordability fell across the country in May, with the monthly mortgage payment up 6.2% month-over-month and 51% year-over-year.

The National Association of Realtor’s (NAR) Housing Affordability Index showed that in contrast to rapidly rising prices, the median family increase rose only 0.7% from April and 4.5% YOY.

Housing affordability fell the most in the South, which saw a 33.8% decline, followed by the West (30%), the Midwest (27.6%), and the Northeast (25%).

All of NAR’s Indices but the West posted readings above 100, meaning a family with the median income had more than the income required to afford a median-priced home. The Midwest was the most affordable region, with a reading of 140.5.

The South was the second most affordable region at 101.2, where the median family income was $82,915 and the qualifying income was $81,936. The Northeast was the second most unaffordable region at 117.1, with a median family income of $102,865 while a qualifying income was $87,840.

The West was the least affordable region by far with a reading of 69.8. There, the median family income was $97,094 and the qualifying income was $139,056. It is the third straight month of sub-100 readings for the West.

Buying was unaffordable for a typical first-time buyer, with average mortgage payments shaking out to 25.6% of their family income. NAR considers a payment unaffordable if it exceeds 25% of the family’s income.

Low inventory has been blamed for the worsening affordability crisis, which particularly impacts first-time buyers who can be outbid by older buyers with more cash and access to equity.

Thomas LaSalvia, Senior Economist at Moody’s Analytics, told Newsweek that first-time buyers have to be patient while inventory corrects.

“We’re going to get more supply. So I think the window for buying a home is closed, but it should open by mid-decade. But it’s going to take some time,” he said.

“So I think, if you’re a first-time homebuyer, you need to be patient and use this time to save as best you can.”