At the national level, housing affordability declined in May compared to the previous month, according to NAR's Housing Affordability Index. Compared to the prior month, the monthly mortgage payment increased by 3.7%, while the median price of single-family homes inclined 2.8%. The monthly mortgage payment increased by $73 from last month.

Compared to one year ago, affordability fell in March as the monthly mortgage payment climbed by 9.9% and median family income rose by 4.8%. The effective 30-year fixed mortgage rate1 was 6.51% this March compared to 5.31% one year ago, and the median existing-home sales price fell 3.4% from one year ago.

Line graph: Housing Affordability Index, May 2022 to May 2023
Bar graph: Mortgage Rates, May 2022 to May 2023

As of March 2023, the national index fell below 100, which means that the typical family cannot afford to buy based on the median-priced home. An index below 100 means that a 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 122.7 (median family income of $89,814 with a qualifying income of $73,200). The least affordable region remained the West, where the index was 67.1 (median family income of $99,846 and the qualifying income of $148,704). The Northeast was the second most affordable region with an index of 95.8 (median family income of $103,652 and the qualifying income of $108,192). The South was the second most unaffordable region with an index of 93.6 (median family income of $83,791 with a qualifying income of $89,568).

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

Bar graph: U.S. and Regional May Housing Affordability, 2023 and 2022
Bar graph: U.S. and Regional Median Family Income and Qualifying Income

Housing affordability2 had double-digit declines from a year ago in only the Northeast region. The Northeast had the biggest decline of 10.1%, followed by the Midwest, with a dip of 8.8%. The South experienced a weakening in price growth of 4.9%, followed by the West, which fell 2.0%.

Affordability was down in all four regions from last month. The Midwest region had the biggest drop of 4.7%, followed by the Northeast with a decline of 4.4%. The West decreased 4.3%, followed by the South region had the smallest decline of 3.0%.

Nationally, mortgage rates were up 120 basis points from one year ago (one percentage point equals 100 basis points) from 5.31 to 6.51%.

Compared to one year ago, the monthly mortgage payment rose to $2,030 from $1,847, an increase of 9.9% or $183. The annual mortgage payment as a percentage of income inclined to 26.7% this May from 25.4% a year ago. Regionally, the West has the highest mortgage payment to income share at 37.2% of income. The South had the second highest share at 26.7%, followed by the Northeast, with their share at 26.1%. The Midwest had the lowest mortgage payment as a percentage of income at 20.4%. Mortgage payments are not burdensome if they are no more than 25% of income.3

Line graph: Monthly Mortgage Payments, May 2022 to May 2023
Line graph: Median Home Prices, May 2022 to May 2023
Line graph: Median Family Income vs. Qualifying Income, May 2022 to May 2023

This week, The Mortgage Bankers Association released data showing mortgage applications increased 0.9% from one week earlier. While applications increased, they are still currently at a low level. Qualifying incomes have outpaced median family incomes making affordability conditions increasingly difficult. Low inventory is pushing home prices back up, which is also creating challenges for potential home buyers.

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.

2 A Home Affordability Index (HAI) value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20% more than the level of income needed pay the mortgage on a median-priced home, assuming a 20% down payment so that the monthly payment and interest will not exceed 25% of this level of income (qualifying income).

3 Total housing costs that include mortgage payment, property taxes, maintenance, insurance, utilities are not considered burdensome of they account for no more than 30% of income.

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