The average median monthly housing cost is increasing for homeowners, even as the price tag on homes has declined, according to recent data.one factor behind the trend? Rising interest rates.

The median monthly housing cost for homeowners rose to $2,414 in May, according to data calculations. Simultaneously occurring, the housing cost-to-income ratio worsened slightly to 34.75%, and Investopedia’s Home Affordability Index slipped to 0.86 during that time period.

While the typical home price for May was up only slightly, average monthly mortgage interest rates increased, pushing the combined cost higher. Investopedia’s monthly payment figure includes principal, interest, taxes, and insurance for a median-priced home.

Housing Affordability

The housing cost ratio stood at 34.8%, according to our recent analysis of trends in May compared to a month prior.

Affordability consists of three parts: income, cost, and the impact of housing costs on household budgets. Homeowners whose housing cost ratio exceeds 30% of their income are considered “housing cost burdened” by the federal government.

The housing cost ratio stood at 34.8%, according to a recent analysis of trends in may. This means that 34.8% of median household income was spent on housing, above the official 30% threshold for affordability.

The Investopedia Home Affordability Index shows the relationship between housing costs and income. A reading of 1.0 or better means housing is affordable. Readings below 1.0 mean housing is unaffordable.

Income Required to Make a Median-Priced Home Affordable

The gross income required to afford a median-priced home in May was $8,046. In other words, a household would need to bring in $8,046 per month for median housing costs to consume 30% or less of income.