As both interest rates and housing prices rise, prospective homeowners are facing an increasingly difficult situation. Nicole Friedman reports in The Wall Street Journal:
U.S. housing affordability worsened in the fourth quarter as home prices rose alongside mortgage-interest rates.
The Covid-19 pandemic helped spark a nationwide housing boom, with prices rising rapidly in every corner of the U.S. But intense competition has pushed more buyers out of the market, especially at lower price points.
Price growth for previously owned homes, which make up most of the housing market, slowed in the fourth quarter from earlier in the year but remained unusually strong due to robust demand and a shortage of homes for sale.
The median sales price for single-family existing homes was higher in the quarter compared with a year ago for 181 of the 183 metro areas tracked by the National Association of Realtors, the association said Thursday.
“Home buyers in the last quarter saw little relief as home prices continued to climb, albeit not as fast as earlier in the year,” said Lawrence Yun, NAR’s chief economist. “A number of families, especially would-be first-time buyers, are increasingly being forced out of the market.”
Median prices rose by more than 10% from a year earlier in 67% of the 183 metro areas, a slowdown from the third quarter when 78% of metro areas reported double-digit-percentage growth.
Nationwide, the median single-family existing-home sales price rose 14.6% in the fourth quarter from a year ago to $361,700, NAR said. That is a slight decline from the record median sales price of $363,100 reached in the prior quarter.
Mortgage-interest rates have continued to rise this year. The average rate on a 30-year fixed-rate mortgage was 3.69% as of Thursday, said mortgage-finance company Freddie Mac, the highest level since January 2020.
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