Industry News

U.S. real estate affordability drops

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The median-income family had more than enough income to purchase a median-priced existing home in the second quarter of the year, according to an index produced by the National Association of Realtors trade group. But affordability dropped about 12 percent from the first quarter to the second quarter. The association's Housing Affordability Index found that the median-income family had 120.8 percent of the income needed to purchase a median-priced existing home, which was $208,500 in the second quarter. The typical family, earning $56,917, could afford a home costing $251,900 in the second quarter. That compares to an index of 133.2 in the first quarter, and an index of 132.3 in second-quarter 2004. A higher median home price and an increase in the average effective mortgage interest rate negated an increase in family income, the association reported. The index measures affordability factors for all homebuyers making a 20 percent down payment, with an index of 100 defined as the po...