Driving the news: New vehicle affordability improved for the second straight month in July, with the typical buyer needing 36.8 weeks of income to purchase an average new car, down from 38.6 weeks a year ago, according to Cox Automotive.
For context: Monthly payments dropped to $748 (the lowest since March) as automakers boosted incentives. Meanwhile, vehicle prices edged down 0.1%.
Auto loan rates stayed flat at 9.63%, but that's still over a full percentage point lower than last July.
Income growth of 3.4% year-over-year helped buyers' purchasing power despite elevated borrowing costs.
Why it matters: Automakers are clearly feeling pressure to move inventory and are using incentives to keep buyers interested after the tariff-related sales surge earlier this year.
Bottom line: The combination of higher incentives, stable rates, and rising incomes is creating a somewhat decent affordability picture. But whether or not it’ll last, is the real question.
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