The cost of owning a home in the US has surged since the Covid-19 pandemic. The median home price in August was $413,000, up from $321,000 during the same month in 2020 — a 28% increase, according to federal data.
To better understand this strain on some families, CNN turned to a home ownership affordability index published by the Federal Reserve Bank of Atlanta. It measures the affordability for median-income households across the US who are hoping to buy a median-priced home in a given area.
The index compares the actual median household income to the “qualified” income needed to keep annual housing costs at or below 30%.
An index score of 100 or higher indicates the median household income is enough to afford the median-priced home based at that threshold. A score less than 100 means the median income is not enough for a median-priced home.
CNN is tracking this index as it’s periodically updated by the Atlanta Fed. Look up your area to see the trends over time — and how they compare with the national average.
The Atlanta Fed’s housing data is available at both the national level and for individual core-based statistical areas, or CBSAs. It’s updated monthly, though there’s typically a two-month lag — mainly because of the time it takes to record and collect home sales deeds. In some regions, the data can show noticeable fluctuations due to seasonal changes in median home prices or shifts in the volume of sales used to calculate those medians.
The Atlanta Fed’s data comes from its Home Ownership Affordability Monitor, or HOAM. It factors in the monthly principal and interest cost, given the current mortgage interest rates, as well as taxes, property insurance and private mortgage insurance in the total cost of home ownership.
“The HOAM index is designed to easily track affordability over time in the United States across geographies,” said Domonic Purviance, a real estate expert with the Atlanta Fed who helped develop the tool.
The center of gravity on affordability has shifted dramatically across the country during the last five years, according to a CNN analysis of the data.
Most metropolitan areas are now on the more expensive side of the threshold.
This nationwide shift varies by region.
Today, most metropolitan areas in the West, for example, are too expensive for the median household under the income threshold. The Midwest has gotten dramatically more expensive, too.