New-vehicle affordability worsened again in May, with increases in interest rates and vehicle prices outpacing income growth, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. The number of median weeks of income needed to purchase the average new vehicle increased for the fourth consecutive month reaching 41.3 weeks in May from an upwardly revised 40.8 weeks in April.
Supporting affordability, median income grew 0.3%, but all other factors moved against affordability. The price paid moved 1% higher. Incentives declined. The average interest rate increased another eight basis points. As a result of these moves, the estimated typical monthly payment increased 1.7% to $712, which was a new record high.
New-vehicle affordability in May was much worse than a year ago when prices were lower and incentives were higher. The estimated number of weeks of median income needed to purchase the average new vehicle in May was up 19% from last year. The next update of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index will be published on July 15, 2022.