Housing Affordability Increases Year-Over-Year Nationwide in January

Thanks to low mortgage rates and a strong job economy, housing affordability increased year-over-year in January 2020 in all four regions analyzed by the National Association of Realtors using its Housing Affordability Index. According to the national and regional indices, a family with the median income had enough to afford a median-priced home at the start of 2020. The Midwest ranked as the most bang-for-your-buck region, but even the West, which has been experiencing population booms and is home to the notoriously pricey California, increased in affordability. Want to see how affordability has changed in your market? Check out the full report to find out. 

At the national level, housing affordability conditions improved in January 2020 compared to last a year ago and rose compared to December, according to NAR’s Housing Affordability Index. Median home prices rose 6.9 % in January from one year ago. The effective 30-year fixed mortgage rate dropped to 3.68% this January from 3.78% in December, mortgage rates are historically low compared to the year-ago level of 4.76%.

As of January 2020, the national and regional indices were all above 100, meaning that a family with the median income had more 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 make up no more than 25% of family income. The most affordable region was the Midwest, with an index value of 220.4 (median family income of $78,378 is almost twice the qualifying income of $35,568). The least affordable region remained the West, where the index was 121.9 (median family income of $85,445 and the qualifying income of $70,080).  For comparison, the index was 177.3 in the South (median family income of $73,548 and the qualifying income of $41,472) and 165.3 in the Northeast (median family income of $91,219 with a qualifying income of $55,200).

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