house pricehigh, mortgageRate of interestIncreasingly, it is making it more difficult for home buyers to afford it.Nationalreal estateThe Housing Affordability Index (Housing-Affordability Index) released by the National Association of Realtors (NAR) on 12th fell to 98.5, the lowest level since June 1989, and hit an all-time low of 98.3 .
Deteriorating housing affordability forced more buyers off the market, and existing-home sales across the United States declined for five consecutive months.
However, after mortgage interest rates hit a 13-year high in June, the growth rate of home prices has slowed. Real estate agents said there are signs of buyers returning to the market; Lawrence Yoon, NAR’s chief economist, believes the worst-case scenario for housing affordability in this period is that it is over, with mortgage interest rates slashing in recent weeks, wages continuing to rise. and the gap has narrowed with the rise in home prices.
Mortgage rates are lower and home prices and wages are higher now than they were 33 years ago when housing affordability was extremely low. According to NAR, in June this year, the average price of a family’s current home was 423,300 yuan, the mortgage interest rate was 5.6%, and the median household income was 91,952 yuan. In June 1989, the three denominations were 94,800 yuan. , 10.6% and 30,000 yuan respectively 4128 yuan.
According to the NAR, current home prices in the United States have increased by 46% over the past three years. In 2020 and 2021, as mortgage interest rates hit historic lows, it is relatively inexpensive to buy a home.
Economists predict that growth in US home prices will be slow or even bearish by 2023; Housing starts are limited and homes for sale have been insufficient since the 2007–2009 recession. Real estate economist Nicole Bachaud said that while home prices won’t go back until 2019, even if it starts to drop slightly, it won’t affect housing affordability significantly.
The rise in mortgage rates in the spring has scared off some buyers who have signed up, and big home builders such as DR Horton and Pultegroup said in July that the cancellation rate in the quarter ended June 30 had risen from the previous year.
NAR said that if a 30-year fixed rate mortgage and 20% down payment is adopted, the monthly mortgage loan would increase from 1,297 yuan in January and 1,265 yuan in June 2021 to the current 1,944 yuan.
As affordability changes, there will certainly be fewer buyers, said Lissie Bishop, a Boise realtor.