The National Association of Realtors is out with a new method of gauging home affordability. As part of NAR’s look at the the growing rift between housing availability and home affordability, NAR has developed a new affordability distribution curve and a home affordability score. The new monthly research is designed to look at home affordability conditions among different income percentiles, gauging how many homes on the market are actually affordable to various buyer income groups.

The new affordability distribution curve and score show that many U.S. homes are no longer affordable to typical prospective buyers. This should come as no surprise, but it’s refreshing to see the National Association of Realtors provide a more realistic picture of home affordability (or lack of it). Compared to the old affordability index, this new approach is dramatically better because it reflects the truth. Home price inflation has exceeded income growth by a large measure during the latest “recovery”. With the recent bump in mortgage rates, home affordability declined even further.

Under the new metric, January’s U.S. home affordability score fell to 0.92 compared to 0.97 last year. Any number below 1 represents a lack of affordability as reflected in current housing inventory. Only 19 states meet the new affordability threshold, and Texas home affordability measured a dismal 0.82. While not as bad as California or Hawaii, the new affordability measure of Texas homes is more reflective of the facts on the ground.

Texas fares worse than the national average when looking an the income cohorts that can afford the housing stock currently for sale. According to NAR’s new measure, 62% of Texas households in the $50,000-$75,000 income demographic can afford only 53% of the existing inventory for sale. It isn’t until you hit the $100,000-plus income bracket that you approach anything close to the equality line where households can afford more homes than their income percentile.

NAR chief economist, Lawrence Yun, says the way to solve the discrepancy between housing stock and housing demand is for builders to construct more new homes that align with buyers’ income profiles.

“This shortfall of inventory at a time of healthy job gains in most states is one of the biggest reasons for the depressed share of first-time buyers and the inability for the homeownership rate to rise above its near-record low…The only prescription to reversing this adverse situation is to build more entry-level and mid-market housing that aligns with current household incomes.”

That’s a decent prescription for solving the problem, but not likely to happen anytime soon. The reason of course centers around the Federal Reserve’s policy blunders. By eliminating price discovery, juicing asset prices back to new highs and promoting increased wealth and income inequality, the Federal Reserve has made homes unaffordable again while putting up huge roadblocks that prevent builders from building affordable homes that moderate income buyers need and want. If that weren’t enough, we also have economic shills offering “alternative facts” about the real causes behind the lack of affordable housing.

Builders need cheaper land prices if they want to build an affordable home product that more buyers can afford. Good luck getting your hands on a piece of cheap dirt. Even here in Texas land prices have soared to new heights in the Fed’s latest trickle-down feeding frenzy. The remaining few who have assets are looking for more in the chase for yield.

New record home prices…check!

Affordable Housing

Bubblicious markets fueled by global central bank money printing…check!

Stagnating economy where wealthy individuals hoard their cash and assets…check!

Here is a clip of the Obama-Yellen team cheering the successful reflation of the U.S. housing bubble after they “foamed the runway” for America’s too-big-to-fail-or-jail institutions.