New Car Affordability Improves Slightly
Over the summer, we reported that new cars were becoming more unattainable for the average American. Since then, the average transaction price for a new car has done an about-face, according to Comerica Bank.
In the third quarter of this year, the average new car cost $27,600, a 1.3% decrease from the average price of $27,950 from our last reporting. The $350 decrease in the average new-car price and a slight increase in family incomes (by 0.2%) contributed to increased overall affordability of new cars for the quarter. It now takes 23.8 weeks of median family income to buy a new car, down from 24.1 weeks in the second quarter.
Where does the price decrease come from? New-car buyers are buying somewhat less expensive cars in the third quarter, which improves affordability, according to Diana Johnson, Comerica’s chief economist.
Still, not all the news from Comerica was positive. The cost of financing ticked up slightly in the third quarter, as shoppers increased the average size of their car loans by $200. Overall, cars and financing are far more affordable today than they were 1997, when it took about 31.5 weeks of income to buy a car, or before the recession in 2006, when it took 27 weeks of income.