Taylor Morrison CEO Cheryl Palmer speaks on “The Craman Countdown” about the headwinds the housing market is facing following a drop in existing home sales in August.
In the United States, soaring mortgage rates and rising home prices are putting homeownership out of reach for millions of Americans and making homes increasingly expensive.
This is new report The study, published by real estate data provider ATTOM, looked at 572 U.S. counties and found that in about 80% of them, the median-priced home was out of reach for the average earner, who makes about $71,214 a year.
“The latest home affordability data presents clear challenges for homebuyers,” said ATTOM CEO Rob Barber. “Home prices are rising and mortgage rates remain relatively high, but these factors are not making housing more affordable.”
Home affordability has worsened across the country due to the sharp rise in home prices and mortgage rates in the second quarter, which together pushed the typical share of the national median wage needed to cover the major costs of homeownership to 35.1%, the highest level since 2007.
Why can’t I find any homes for sale?
Housing affordability has worsened across the country due to sharp increases in home prices and mortgage rates in the third quarter. (Andrew Caballero Reynolds/AFP/via Getty Images)
“The latest figure is considered unaffordable by typical lending standards that call for a debt-to-income ratio of 28 percent,” the report said. “This is the highest level since 2007 and well above the 21 percent figure at the start of 2021, just before mortgage rates began to rise sharply from their historic lows.”
Relative to historical levels, the median cost of homeownership in 582 of the 589 counties surveyed in the second quarter of 2024 was more unaffordable than in the past, about 15 times higher than it was in early 2021.
In fact, to be considered able to afford the major homeownership costs of a typical home sold in the second quarter, you would need to earn an annual income of $90,598, more than 25% higher than the national median income.
There are several reasons for the worsening housing price hike.
Showing homes available for sale in Austin, TX on May 22, 2024. (Photo by Brandon Bell/Getty Images/Getty Images)
Between COVID-19 pandemicHome prices have soared to their highest level since the 1970s, as homebuyers flush with cash from stimulus checks and hungry for more space during the pandemic have flocked to the suburbs, taking advantage of ultra-low mortgage rates.
Mortgage calculator: See how much rising interest rates will cost you
Demand was so high and inventory so low that at the height of the market, some buyers forego home inspections and appraisals or paid hundreds of thousands of dollars above the asking price.
This enthusiasm is Federal Reserve The government has embarked on the most aggressive interest rate hike campaign since the 1980s in an attempt to slow the economy and tame runaway inflation, pushing the average rate on a 30-year mortgage above 8% for the first time in years.
The housing shortage has only boosted consumer demand, keeping home prices uncomfortably high. (David Paul Morris/Bloomberg/via Getty Images)
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These rising mortgage rates have created a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of 3% or less at the start of the pandemic are now reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
Mortgage buyer Freddie Mac said Thursday that the average interest rate on a 30-year loan fell this week to 6.86% from 6.87%, down from a fall peak of 7.79% but still well above the pandemic-era low of just 3%.
