Housing affordability in the U.S. fell considerably in May, compared to the same period last year. The NAR points that average family incomes rose 1.2%, surpassing the average index recorded in May 2020. Additionally, monthly mortgage also rose 20%. This means that only a few households can afford their mortgage payments and still cover other expenses conveniently as prices continue to increase due to low supply and high demand.
May’s data was relatively the same as April. Comparing both months, mortgage payment for April rose 1.7%. However, the average family income declined by 1%.
Housing Prices and Affordability Indices Incline
Housing prices rose in all regions from June, with the South recording the most significant fall of 3.9%. The Midwest followed with 3.1%. The smallest decline occurred in the Northeast with 0.4%, and then the West with 0.5%.
The housing market is directly proportional to the cost of living. According to May Housing Affordability Indices this year, all four regions recorded above 100. The most expensive area was the West with an index of 113.1, and then the Northeast with 157.2. The most affordable regions were the Midwest and South with 196.4 and 159.7 indexes respectively.
Average household and qualifying income in the Midwest was approximately $86,000 and $44,000, while the most expensive, the West, was $94,000 and $83,000, respectively. These indices mean that an average household would service their monthly mortgage payment with over 88% of their income in the West, which is considered too expensive. In the Midwest, a family would need to service their monthly house mortgage with 51.16% of their income.
House unaffordability continues to incline with mortgage payment still on the rise in all U.S. regions. The house unaffordability is due to the high demand, and the current home availability is insufficient to meet this increasing demand.
Fortunately, mortgage rates declined this week to about 2.8, while credit went up 1.4%. This only means one thing – that there would be a slight reduction in the monthly payment. Families can now agree to make monthly payments without inconveniences in paying their taxes, insurance, bills, and maintenance.
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The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, and is headquartered in Riverside, California. We are advocates for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com.
Published by Eric Lawrence Frazier, MBA.
