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Home affordability worsens as higher mortgage rates take a bite

By Prashant Gopal | Bloomberg

It’s harder than ever to afford a home in the US, with higher mortgage rates claiming a bigger share of incomes and prices still rising at double-digit rates across most of the country.

The monthly bill on a typical existing single-family home with a 20% down payment jumped to $1,841 in the second quarter, according to the National Association of Realtors. That’s up 32%, or $444, from the first quarter and a 50% jump from a year earlier. Families spent about 24% of their incomes on mortgage payments in the second quarter, up from 19% in the previous three months and 17% last year.

The median price topped $400,000 for the first time, reaching $413,500. The 14.2% gain from a year earlier was slightly smaller than the 15.4% annual increase in the first quarter, thanks to a slowdown in sales. But that’s little comfort to would-be buyers who are stretching to afford a purchase and still getting tangled in bidding wars.

“Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers,” said Lawrence Yun, chief economist for the Realtors group. “Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief.”

In the second quarter, 148 of the 185 metro areas measured by the Realtors group — or 80% — had double-digit annual price gains. That was up from 70% of regions in the first quarter.

Source: Orange County Register

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