Let’s update one measure of housing prices: comparing of the purchasing power of buyers vs. the price a typical house. There are at least 3 indexes.
First, here is the N.A.R.’s “Housing affordability index,” updated through May. This compares their estimate of median household income vs. the median price of an existing home:
Note that the data isn’t seasonally adjusted, so there is an annual cycle. Even so, it is clear that affordability is at its lowest in 10 years. But on the other hand, the index is nowhere near its lows of 2005 or 2006.
Second, the private firm ATTOM Data Solutions publishes an index comparing annualized wages to median house prices:
This, like the N.A.R.’s Index, just made a 10 year high, or low, depending on how you look at the data, but again, is nowhere near the level of u affordability from the peak of the housing bubble.
Finally, here is the comparison, performed by Political Calculations, of monthly median household income, as measured by Rentier Research (which recently restarted this feature), compared with the median price of a *new* home:
New houses, as opposed to existing houses, are at new all time highs, even as compared with the peak of the housing bubble.
The sharp difference in affordability between new and existing houses is probably the main reason why existing houses most recently have sold after an average of only 27 days on the market, and months’ inventory of existing houses is at all time lows.
Finally, just keep in mind that this measure does not tell us what the monthly mortgage payment for the median house will be. Because interest rates, even with recent increases, are still 1%-2% lower than they were during the 2000s housing boom, the monthly mortgage payment is nowhere near an extreme at this point.