New cars were more affordable in January – the first time we’ve been able to say that since last March.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures the ability of a household earning the median income to afford the purchase of an average-priced automobile. It calculates the number of weeks the average earner would need to work to pay off the average new car. Cox Automotive is the parent company of Kelley Blue Book.
For most of the past year, the affordability index has been telling a depressing story. Soaring new car prices have canceled out income gains, making a new car more difficult for most people to afford.
In January, that situation got modestly better. The average price Americans paid for a new car declined for the first time in more than a year. Median income grew. Interest rates moved against consumers.
The number of median weeks of income needed to purchase the average new vehicle in January declined to 42.8 weeks. That remains historically high. But it’s lower than the 43.3 weeks buyers needed in December.
The estimated typical monthly car payment declined 0.8% to $685 from what had been a record high of $690 in December.
