Affordability in the housing market is as bad as it's been in more than three decades and relief isn't coming this year. The increase in the RHPI was driven by 5.9% growth in nominal home prices and a jump of 0.6% in the 30-year fixed mortgage rate compared to a year ago.
At the beginning of the year, we predicted affordability may end 2024 modestly higher than at the end of 2023, First American chief economist Mark Fleming said. Unfortunately, inflation has proven stubborn and led to the Federal Reserve's higher-for-longer' stance on interest rates, contributing to an elevated outlook for mortgage rates.
While Fleming doesn't see a meaningful improvement in affordability for the rest of the year, he does see it coming in 2025 if mortgage rates come down as the Federal Reserve has signaled. Other positive signs that could improve affordability are that hourly wage growth has increased by 4.1% year over year, job growth has been steady, and unemployment is low.
[
Collection
]
[
|
...
]