- Economic headlines have been topsy-turvy, but new car affordability barely changed last month.
- With an interest rate increase possible in late 2026, buying opportunities may worsen this fall.
New cars are hard to afford right now, and there’s little reason to believe that will change in the next few months.
Prices are one way to measure affordability, but we think there’s a better one. The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long the average earner would have to work to pay off the average new car.
Related: Is Now the Time to Buy, Sell, or Trade-In a Car?
After all, few of us buy cars with cash. Most of us borrow to buy, and work to pay off the loan. The index puts a measurement on a new car’s price in time worked.
Kelley Blue Book parent company Cox Automotive publishes the index.
In July, it stood at 35.4 weeks – just 0.1 weeks longer than in June. The typical monthly payment rose 0.7% month over month to $768 – 2.9% higher than last July. It peaked in December 2022 at $795.
The numbers aren’t likely to get better as summer winds down. Federal Reserve members were divided in their most recent projections for the future, with some suggesting an interest rate hike is due this fall and others indicating they intend to keep rates flat.
Automakers, meanwhile, have canceled production of most cars priced under $25,000 and increased the number of models available at $60,000 or more as most chase the same cohort of higher-income, better-credit buyers.
