- New car prices are rising, but income growth is outpacing those increases.
- New car costs are back to pre-pandemic norms as a share of the average American’s income.
New cars grew slightly easier to afford in March.
New car prices are on the rise, with the average vehicle in March selling for a price 3.5% higher than a year ago. But prices aren’t the most accurate way to understand the cost of a car.
Time is.
Few Americans can buy a new car with cash. Most borrow, then work to pay off the loan.
So the Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures affordability in terms of working time – it shows how long the average earner would have to work to pay off the average new car. Cox Automotive is the parent company of Kelley Blue Book.
In March, the index fell to 35.1 weeks, down from 35.4 weeks in February.
Related: Is Now the Time to Buy, Sell, or Trade-In a Car?
The index hovered between 33 and 36 weeks for about a decade before the COVID-19 crisis upset the car market. It peaked at 44 weeks in December of 2022.
Transaction prices have risen through much of 2026, with the average buyer paying $49,275 in March.
But incomes are rising faster than car prices. The average buyer’s income ended March 3.9% higher than a year ago.
The credit market is also strong. Americans had an easier time qualifying for a car loan in March than at any point since June 2022.
The average monthly new car payment fell to $752 in March, down 0.5% from February but still nearly 3% higher than a year ago. The average monthly payment peaked at $795 in December 2022.
