Most Americans cannot afford homes 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 family. That’s down from last year, when Redfin found it 21% of homes for sale were affordable For the typical buyer.
Redfin determines affordability based on estimated mortgage payments equal to or less than 30% of the median monthly income of residents in the local county.
Redfin isn’t the only real estate company to point out housing affordability issues. Earlier this year, the National Association of Realtors said that middle-income families, or families with annual incomes of up to $75,000, He can only handle 23% Of homes for sale in the United States
Researchers from real estate data provider ATTOM examined median home prices for about 575 U.S. counties last year and found that House prices In 99% of those areas they were out of reach of the middle income earner, which ATTOM defined as someone earning $71,214 a year.
What drives affordability issues?
The houses were in Short supply this year. In June, Realtor.com said the number of homes for sale in 2023 was down in 21 of the 50 largest metro areas compared to the same period last year.
Higher mortgage rates this year also led fewer homeowners to list their properties, because they feared they would have to buy a new home at an interest rate of 7% or higher — more than double the usual rate during the pandemic. MoneyWatch mentioned. Tight inventory means buyers are competing for a limited selection of housing, driving up prices.
Will homes be affordable in 2024?
There is some good news heading into next year. Housing inventory It rose 7.5% year-over-year in November, according to Realtor.com. With more homes on the market, there is more competition, which can lead to lower home prices.
Mortgage rates are slowly falling after rising to record lows this fall The highest level In more than two decades. The 30-year mortgage interest rate remained below 7% for the second week in a row. Freddie Mac He said Thursday. The downtrend comes after 17 consecutive weeks above 7%.
“Low interest rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market, and builders are already starting to feel the positive effects,” Freddie Mac said. “A rise in homebuilder confidence, followed by new home construction reaching its highest level since May, indicates a response to meet increased demand as existing inventory remains low.”
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