The National Association of Realtors (NAR) released June 2015 figures for their Housing Affordability Index, showing that housing in the United States has gotten even less affordable over the past month. This month’s composite index value is 153.1, down from the 159.2 figure recorded last month. While seasonality accounts for the decrease in affordability seen in the summer months, this year’s June index is also lower than last year’s index of 155.2. NAR’s index uses median existing home sale prices and necessary mortgage qualifying income to test whether a typical family is able to qualify for a mortgage in the United States. While mortgage qualification is dependent on a number of unique factors, the index aims to provide a nationwide perspective on home affordability.

According to NAR, “an index 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 increase in the Housing Affordability Index would mean that a family earning the typical income will have earned more than enough to quality for a mortgage, and the opposite when the Index dips below 100.

The two main components of the index formula are median family income and the income necessary to qualify for a loan on a median priced home. Since May 2015, the U.S. Census reports that median family income has increased by $161 to $66,637. Qualifying income has increased to $43,536, assuming a down payment of 20% and a median interest rate of 3.99%. Median interest rate estimates are provided by the Federal Housing Finance Board.

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