From Business Insider:
Housing affordability in the US is at an eight-year low, according to Attom Data Solutions.
The parent company of RealtyTrac released its fourth-quarter affordability index on Thursday, which dropped to the lowest level since the same period in 2008.
And now mortgage rates are rising again. According to Freddie Mac, the average rate for a 30-year fixed mortgage hit a two-year high of 4.3% this week. That was up from 4.16% last week, when the Federal Reserve raised its benchmark interest rate and signaled that it expected to hike in the new year more times than it previously thought.
Mortgage rates are still near historic lows, so the housing market is not seeing much of an effect yet. Some prospective buyers could rush to lock in the lowest rates possible in the next few months, according to the National Association of Realtors.
“The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability next year,” Daren Blomquist, senior vice president at Attom, said in a statement. “Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets.”
Two other reports on Thursday showed that housing affordability could become an even bigger issue in 2017. The Home Price Index from the Federal Housing Finance Agency showed that year-over-year, home prices rose by 6.2% in the third quarter, a record high. And home values rose 6.5% in the year through November, the fastest pace since 2006, according to Zillow.
As with the prior housing crisis, strong buyer demand is fueling this price rally. This time, however, a shortage of inventory is also pumping up values.