Most Americans cannot afford to buy the homes that are for sale in the United States, real estate brokerage Redfin said in a report Thursday.
An analysis of listings in 97 of the country's most populous metropolitan areas found that only 15.5% of homes for sale in 2023 were affordable for the typical American household. That's a decrease from last year, when Redfin found thatfor the typical buyer.
Redfin defines affordability based on the estimated mortgage payment equal to 30% or less of the median monthly income of local county residents.
Redfin isn't the only real estate company pointing out housing affordability issues. Earlier this year, the National Association of Realtors said that middle-income households, or households with annual incomes up to $75,000,of homes listed for sale in the US
Researchers at real estate data provider ATTOM examined median home prices in about 575 U.S. counties last year and found thatIn 99% of those areas they were out of reach of the average-income person, which ATTOM defined as someone who earns $71,214 a year.
What is driving affordability issues?
The houses were inthis year. In June, Realtor.com said the number of homes for sale in 2023 decreased in 21 of the 50 largest metropolitan areas compared to the same period last year.
A rise in mortgage rates this year also led to fewer homeowners listing their properties because they feared having to buy a new home at a rate of 7% or more, more than double the typical rate during the pandemic.reported. A tight inventory means buyers compete for a limited pool of homes, driving up prices.
Will housing be more affordable in 2024?
There is good news for next year.increased 7.5% year over year in November, according to Realtor.com. With more homes on the market, there is more competition, which can potentially drive home prices down.
Mortgage rates are slowly falling after this drop spiked to its level freddy mac he said Thursday. The downward trend occurs after 17 consecutive weeks above 7%.in more than two decades. The 30-year fixed-rate mortgage remained below 7% for the second consecutive week,
“Lower rates are bringing potential homebuyers back into the market who were previously waiting on the sidelines, and builders are already starting to feel the positive effects,” Freddie Mac said. “An increase in homebuilder confidence , followed by new home construction reaching its highest level since May, indicates a response to meet increased demand while current inventory remains low.”
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