At the national level, housing affordability improved in March 2020 compared to a year ago but fell compared to February, according to NAR’s Housing Affordability Index. Median home prices rose 8.0 % in March from one year ago. The effective 30-year fixed mortgage rate1 fell to 3.51% this March from 3.53% in February. Mortgage rates are historically now compared to the year-ago level of 4.51%.

Line graph: Housing Affordability Index March 2019 to March 2020

As of March 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 203.5 (median family income of $77,667 is almost twice the qualifying income of $38,160). The least affordable region remained the West, where the index was 115.4 (median family income of $84,669 and the qualifying income of $73,344). For comparison, the index was 169.1 in the South (median family income of $72,881 and the qualifying income of $43,104) and 175.3 in the Northeast (median family income of $90,390 with a qualifying income of $51,552).

Bar chart: U.S. and Regional Income Qualifying Income

Housing affordability2 increased from a year ago in all four regions.

Affordability is down in all four regions from last month. The Midwest had the largest decline of 8.3% followed by the West with a drop of 3.9%. The South had a decline of 3.6% followed by the Northeast with the smallest drop of 2.1%.

Nationally, mortgage rates were down 100 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in March in the US was $282,500 up 8.0% from a year ago, while median family incomes rose modestly at 0.9 % in 2020 from one year ago.

Bar chart: March Housing Affordability 2020 and 2019

With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.4% this March from 16.3% from a year ago. Regionally, the West has the highest mortgage payment to income share at 21.7% of income. The South had the second highest share at 14.8% followed by the Northeast with their share at 14.3%. The Midwest had the lowest mortgage payment as a percentage of income at 12.3%.

Line graph: Payment as Percent of Income March 2019 to March 2020

This week the MBA reported mortgage applications increased 0.3% compared to last week. Refinance applications declined from the previous week. Home prices remain strong while the supply of homes available for purchase remains low. Homeowners who took their homes off the market due to the COVID-19 virus may look to relist their homes based on the opening of the state economy. This would help provide inventory to meet the demand for those who wish to purchase a home while rates continue to be at historic lows.

What does housing affordability look like in your market? View the full 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 percent 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).



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