Homebuyers' buying-power increased in August as mortgage rates eased, while prices moderated to make home affordability slightly better
Homebuyers’ buying-power increased in August as mortgage rates eased, while prices moderated to make home affordability slightly better.
A measure of housing affordability from First American Financial Corporation which accounts for the buying power of potential homebuyers shows that ‘real house prices’ decreased 0.4% in August 2017 compared to July while the annual increase was 9.6%.
Home-buying power of consumers was up 0.8% in the month as wages increased slightly, but it was down 3.2% year-over-year.
“A dip in mortgage rates in August offset rapid price appreciation driven by the lack of supply, as existing homeowners remain reluctant to sell for fear of not being able to find something to buy. However, based on our RHPI, over the past 12 months affordability has declined by more than 9 percent,” said Mark Fleming, chief economist at First American.
Fleming added that the gain for affordability in August is likely just a pause in the increasingly unaffordable housing market with mortgage rates expected to rise in the months ahead.
“Last month, the Federal Open Market Committee (FOMC) announced that it will begin to reduce its large portfolio of bonds, which is likely to push mortgage rates higher in the coming months. This quantitative un-easing will further impact affordability,” he said.
Affordability may have dipped since the summer of 2016 but Fleming noted that it is up by historic standards.
“Only three states and the District of Columbia are less affordable today than they were in January 2000,” he said.
A measure of housing affordability from First American Financial Corporation which accounts for the buying power of potential homebuyers shows that ‘real house prices’ decreased 0.4% in August 2017 compared to July while the annual increase was 9.6%.
Home-buying power of consumers was up 0.8% in the month as wages increased slightly, but it was down 3.2% year-over-year.
“A dip in mortgage rates in August offset rapid price appreciation driven by the lack of supply, as existing homeowners remain reluctant to sell for fear of not being able to find something to buy. However, based on our RHPI, over the past 12 months affordability has declined by more than 9 percent,” said Mark Fleming, chief economist at First American.
Fleming added that the gain for affordability in August is likely just a pause in the increasingly unaffordable housing market with mortgage rates expected to rise in the months ahead.
“Last month, the Federal Open Market Committee (FOMC) announced that it will begin to reduce its large portfolio of bonds, which is likely to push mortgage rates higher in the coming months. This quantitative un-easing will further impact affordability,” he said.
Affordability may have dipped since the summer of 2016 but Fleming noted that it is up by historic standards.
“Only three states and the District of Columbia are less affordable today than they were in January 2000,” he said.
