The National Association of Realtors housing affordability index was unchanged at 87.8 in July, matching the lowest level in data back to 1989. A level of 100 means a family with the median income has enough income to qualify for a mortgage at the median home price.
“Higher mortgage rates continued to harm affordability despite modestly lower median home prices,” Lawrence Yun, NAR’s chief economist, said in an email. “Consequently, the Federal Reserve is unintentionally widening the social divide by preventing middle-income renters from ownership opportunities.”
The lack of inventory has, in turn, driven up home prices, and allowed the housing market to recoup the nearly $3 trillion in value wiped out last year.The deepening affordability challenge is compounded by the toll of high inflation on household budgets. While the inflation rate is moderating, the cost of rent, groceries and other necessities is much higher it was just a couple years ago. By in large, Americans’ incomes haven’t been able to keep pace.
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