Buying a house is harder than it’s been in five years.

If you're the typical American house hunter, might want to avoid looking at the following graph.

 

That's right: According to the National Association of Realtors, it's almost as hard to afford a house as it was back when the financial crisis started to hit in 2008. But is that good or bad for the economy?

Well, both. The Affordability Index is based on median household income, home prices, and interest rates. As the housing market has recovered, prices are on the rise.

That's generally seen as a positive sign. Meanwhile, though, median household income hasn't risen as quickly.


(Sentier Research)

And at the same time, mortgage rates have increased dramatically over the past year.

So the index is a reflection of a few indicators that the economy is doing well, plus the countervailing force of incomes that haven't quite kept up. It's important to note, though, that the NAR's index is still in positive territory: The 100 marker means that the median household can qualify for a 30-year fixed-rate mortgage on the median-priced home, with a 20 percent down payment. So at the moment, the typical household makes 160 percent of what it needs to afford the typical mortgage.

It's not the same for everyone, though: You're worse off in the West, and better off in the Midwest, where the median home can still be had for $169,000.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.

business

wonkblog

Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Comments
Show Comments
Most Read Business

business

wonkblog

Success! Check your inbox for details.

See all newsletters

Next Story
Evan Soltas · September 9, 2013

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.