According to Goldman Sachs' Briefings newsletter, affordability is the biggest challenge for the U.S. housing market.
The Goldman Sachs Housing Affordability Index declined to as low as 70 on Mar. 8.
The Housing Affordability Index measures the ability of an average U.S. household to afford a new mortgage.
- It is the ratio of the median monthly income and the median monthly mortgage payment.
- Goldman's strategists cited higher home prices and mortgage costs as the main factors driving down affordability.
- Strategist Vinay Vishwanathan said deteriorating affordability would force lower-income households on the verge of buying a house to continue renting and wait for mortgage rates to fall.
- He predicted the declining affordability would drive home prices down an additional 6% in 2023.
