Articles

When will home prices be afforable again?

The national average 30-year fixed mortgage rate crossed the 7% mark in the third week of August, rising to 7.09% the week ending August 17.

The median existing-home sales price also broke through $400,000 for the first time in 2023, hitting $410,200—the second-highest price ever recorded—and is now poised to surpass the June 2022 all-time high of $413,800, according to the National Association of Realtors (NAR).

Meanwhile, existing monthly home sales dropped 3.3%, with all four major U.S. regions posting year-over-year sales declines.

Despite high mortgage rates, the market remains as competitive as ever thanks to strong demand coupled with tight inventory supply, due, in part, to those who purchased homes in recent years at record-low interest rates staying put. These and other factors form a perfect affordability crisis storm that continues to sideline many aspiring homeowners.

Many experts believe mortgage rates will remain above 6% for the remainder of this year.

Despite signs that home prices are beginning to weaken in some regions, the country is contending with a housing affordability crisis thanks to a meager housing supply, persistently high mortgage rates and sales prices that have steadily resumed their climb since February.

Even as inflation cools, those hoping to buy a home continue to feel the effects of pandemic-fueled home price appreciation coupled with elevated interest rates.

First-time home buyers hoping to buy a starter home will need to earn about $64,500 a year—that’s 13% more than a year ago, according to a Redfin report. A typical starter home hit an all-time high of $243,000 in June.

Instead of waiting for much lower prices, experts suggest buying a home based on your budget and needs. If you find a home you love in an area you love, and it also fits your budget, then chances are it might be right for you.