National Housing Affordability Fell in October Amid Soaring Mortgage Payments

US-ECONOMY-INDICATOR-REAL-ESTATE — (Photo : (Photo by STEFANI REYNOLDS/AFP via Getty Images)) A sign is displayed in front of a new housing development in Burke, Virginia, on April 26, 2022. - Sales of new homes fell in the US last month, government data said on April 26, as high prices continued to crimp demand. Sales dropped to an annualized rate of 763,000, seasonally adjusted, less than analysts anticipated and 8.6 percent below the rate in February, which was revised sharply upwards, the Commerce Department reported.

The national housing affordability level fell in October after mortgage rates soared nearly 8% and mortgage payments increased by over 3% compared to the prior month, according to a report.

The housing affordability index fell to 91.4 in October. In comparison, the housing affordability index was 94.5 in September of this year and 99 in October 2022, data from the National Association of Realtors (NAR) showed.

Several factors contribute to the tumbling housing affordability index. For instance, the monthly mortgage payments increased by 3.9% or $84 in October compared to the previous month. Compared to the same period in 2022, the monthly mortgage payment climbed by 10.6%.

In addition, housing affordability fell after the 30-year fixed mortgage rate soared to 7.70% in October compared to 6.98% last year. The median price of existing homes also rose 2.5% to $396,100 from $384,600 in October 2022.

Where Housing Affordability Tumbled

Housing affordability fell in all four regions. Compared to September, the South had the biggest dip, falling by 4%. The Midwest region saw the smallest drop in housing affordability at 1.0%

Compared to October 2022, housing affordability declined the most in the Northeast region where it dropped by 11.7%. The West saw the smallest drop, at 6.3%

How the Median Family Income Compares

Despite increasing home sales prices and mortgage payments, the median family income only rose by 2.1% to $99,109. That is $9,323 lower than the qualifying income. This pertains to the income needed so that mortgage payments on a 30-year fixed term with a 20% down payment account for 25% of family income.

Of all four regions, the Midwest is the most affordable. The median family income in the region is $96,716, which is $18,092 more than the qualifying income.

The Southern region followed as the second most affordable place to buy a home. The median family income in the South is $91,203, while the qualifying income is $99,696.

The West remained the least affordable region where the median family income is $108,059, and the qualifying income is $168,144. The Northeast was the second most unaffordable region, with a qualifying income of $122,496 and a median family income of $111,090.