For the second month in a row, national housing affordability improved in August, according to the latest National Association of Realtors housing affordability index report.

This improvement came as monthly mortgage payments fell by 1.1% while median family income fell by 0.7%. As of August 2021, the 30-year fixed mortgage rate was 2.89% compared to 3% a year prior. Median existing home sales prices rose 15.6% in the same time period.

To calculate the housing affordability index, a 20% down payment and a 25% ratio of principal and interest payment to income, is assumed. Index values over 100 indicated that a family with the median income had more than the income required to afford a median-priced home.

Contributing to the increase in affordability are low mortgage rates, which have fallen for back-to-back months and the seasonal slowing of home price growth.

Despite rising to 151.3 in August from a low of 146.5 in June 2021, the housing affordability index is still well below its August 2020 level of 165.8.