- New cars grew less affordable in August, with higher prices outpacing income growth.
- The numbers will only get worse after the Federal Reserve raised interest rates.
Americans found it harder to afford new cars in August than in July, though affordability remains better than its pandemic-era low.
There are many ways to measure affordability. Prices are one way — the average new car price was $50,089 in August.
But we think time is a better measure. Few Americans can afford to buy a new car with cash. So, the Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long the average American would need to work to pay off the average new car.
Kelley Blue Book parent company Cox Automotive publishes the index.
It rose to 35.5 weeks in August, 0.1 weeks higher than July, but 1.3 weeks lower than last August.
Related: Is Now the Time to Buy, Sell, or Trade-in a Car?
Incomes grew in August, but not as fast as new car prices. We expect the negative trend to continue into early fall, as the Federal Reserve voted yesterday to raise its benchmark interest rate.
The average monthly payment sat at $770 in August, up 2.6% from a year ago.
