At the national level, housing affordability rose in January compared to the previous month, according to NAR’s Housing Affordability Index. Compared to the prior month, the monthly mortgage payment decreased by 3.3% while the median price of single-family homes declined by 2.4%, making home buying more affordable in January. The monthly mortgage payment decreased by $62 from last month.

Compared to one year ago, affordability fell in January as the monthly mortgage payment climbed 39.3% and median family income rose by 6.4%. The effective 30-year fixed mortgage rate was 6.35% this January compared to 3.51% one year ago, and the median existing-home sales price rose 0.7% from one year ago. Mortgage rates have declined for three consecutive months.

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

As of January 2023, the national index was back above 100, which means that the typical family can now afford to buy based on the median-priced home. An index below 100 means that a family with a median income has 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 147.3 (median family income of $89,382 with a qualifying income of $60,672). The least affordable region remained the West, where the index was 77.6 (median family income of $99,366 and a qualifying income of $127,968).  The Northeast was the second-most affordable region with an index of 111.6 (median family income of $103,153 and a qualifying income of $92,448). The South was the second most unaffordable region with an index of 103.0 (median family income of $83,388 with a qualifying income of $80,976).

A mortgage is affordable if the mortgage payment (principal and interest) amounts to 25% or less of the family’s income.2

Bar graph: U.S. and Regional January Housing Affordability, 2023 and 2022

Housing affordability3 had double-digit declines from a year ago in all four regions. The South had the biggest decline of 25.3%, followed by the Midwest with a dip of 25.1%. The Northeast experienced a drop in affordability of 22.2%, followed by the West, which fell by 19.2%.

Affordability was up in all regions from last month. The West region rose by 6.9%, followed by the Midwest with an incline of 4.5%. The Northeast increased by 3.8%, followed by the South region, which had the smallest gain of 3.1%.

Nationally, mortgage rates were up 284 basis points from one year ago (one percentage point equals 100 basis points) from 3.51 to 6.35%.

Compared to one year ago, the monthly mortgage payment rose to $1,807 from $1,297, an increase of 39.9%, or $510. The annual mortgage payment as a percentage of income increased to 23.8% this January from 18.2% a year ago. Regionally, the West has the highest mortgage payment to income share at 32.2% of income. The South had the second-highest share at 24.3%, followed by the Northeast with a share of 22.4%. The Midwest had the lowest mortgage payment as a percentage of income at 17.0%. Mortgage payments are not burdensome if they are no more than 25% of income.4

Bar graph: U.S. and Regional Median Family Income and Qualifying Income January 2023
Line graph: Monthly Mortgage Payments, January 2022 to January 2023
Line graph: Median Home Prices, January 2022 to January 2023

This week, the Mortgage Bankers Association released data showing that Mortgage applications increased 7.4 percent from one week earlier. Mortgage rates continue to move downwards, and median home prices have come down from the previous months’ highs. Both factors help affordability conditions bringing down monthly payments. Inventory levels are increasing, which will also tame some of the recent price growth. This will be helpful to potential home buyers going into the spring season, in which home sales increase.

Read the data release.

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


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 a 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 percent down payment.

2 Housing costs are burdensome if they take up more than 30% of income. The 25% share of mortgage payment to income takes into account that homeowners have additional expenses such as mortgage insurance, home insurance, taxes, and expenses for property maintenance.

3 A Home Affordability Index (HAI) value of 100 means that a family with a 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 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).

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

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