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Housing price update

The September release of housing price indices reveals that prices appear to be still in a gentle decline, especially after adjusting for inflation. But after adjusting for the fact that real incomes are growing and borrowing costs are at all-time lows, housing prices are more affordable today than at any time in recent decades, as shown in the chart (below) of housing affordability (when the index is 100, that means a family earning the median income has exactly the income needed to purchase a median-price resale home using conventional financing; levels higher than 100 mean that a median-income family has that much more income than needed).

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