On the Dash:
- New-vehicle affordability declined slightly in June as prices and loan rates outweighed income growth
- Affordability still beat last year, thanks to 4.1% income growth and lower rates.
- Affordability pressure on new vehicles is already pushing consumers into the used-car market.
New-vehicle affordability declined slightly in June, as higher prices and higher interest rates outweighed income growth, according to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index report.
According to the report, the estimated average auto loan rate increased to 9.58% in June, up from 9.53% in May and roughly flat year over year. Additionally, the average vehicle price increased 0.4% month over month to $49,758, according to Kelley Blue Book.
Income growth remained steady in June, up 0.3% month over month, but not enough to keep pace with rising prices. Higher prices and interest rates reduced buying power, and slightly lower incentives added further pressure on affordability.
The typical monthly payment increased 0.7% to $763 in June, up 0.5% year over year, the report found. Average payments peaked at $795 in December 2022. That figure has remained steady in 2026, averaging $758 during the first half of the year. Notably, the median number of weeks of income needed to purchase the average new vehicle increased to 35.3 weeks, up from 35.2 weeks in May.
New-vehicle affordability in June was still better than a year ago, even though prices were 0.6% higher, because interest rates were lower and incomes were notably higher, up 4.1% year over year, Cox Automotive said.
Incentives in June were also 1.5% higher than a year ago. As a result, the number of weeks of median income needed to purchase the average new vehicle was down 3.4% from a year earlier. Cox Automotive analysts say that gap suggests overall economic conditions continue to challenge vehicle affordability more than vehicle prices themselves.
The affordability squeeze on new vehicles is also impacting the used-car market. Analysts say elevated new-vehicle prices and interest rates are making it harder for consumers to replace their vehicles, a trend they expect to cut vehicle-selling activity 14% between 2024 and the end of 2026 and to make the second half of 2026 more difficult for dealers.
The next Vehicle Affordability Index update on Aug. 17, which will show whether June’s slight decline holds or reverses again heading into the back half of 2026.
