Buying a house became slightly more affordable in Q1 2023 as the housing market remains stalled, but remained out of reach for many Americans.
According to ATTOM Data Solution’s Q1 2023 U.S. Home Affordability Report, median-priced single-family homes and condos were less affordable in the first quarter of 2023 compared to historical averages in 94% of counties. This is a huge leap from the 62% of counties that were less affordable at the same time last year.
The portion of average wages it takes to pay major homeownership costs decreased slightly to 30%. While this is still unaffordable by most lending standards, it’s a minor improvement from the 31% registered at year-end 2022.
ATTOM calls this housing data a “mixed picture.” Even as home prices have retreated and wages have risen, high interest rates, economic turmoil, and inflation have kept affordability in the gutter.
“The soaring housing market has finally come back down in much of the U.S., at least for now, while worker pay is growing. That’s produced some benefits for home seekers in the form of slightly better affordability, especially as lending rates have flattened out,” said Rob Barber, ATTOM CEO.
“Things certainly haven’t swung way back into friendly territory. Price drops and wage gains haven’t yet translated into equal improvements in affordability. And the trend could go back the other way if interest rates go up again, as expected. But the scenario is becoming more favorable for buyers.”
Recent banking trouble has forced the Central Bank to pump the brakes on rate increases, projecting last week that the 2% inflation mark may not be reached until 2025.
Orphe Divounguy, senior macroeconomist at Zillow, told The Mortgage Note that aggressive rate hikes by the Fed might bring further volatility to the mortgage industry.
Fed Chairman Jerome Powell noted that as interest rates continue rising, households can expect a “tightening” of credit, which could impact activity in the real estate market directly.
“Financial conditions seem to have tightened, and probably by more than the traditional indexes say,” Powell told Jennifer Schonberger of Yahoo Finance during a question and answer session at the Fed’s most recent press conference.
Powell characterized housing activity as “weak” so far in 2023. But ATTOM says that the results of the spring and summer markets, along with the path of wages, will decide whether homes become more or less affordable moving forward. If rates remain stable and home price declines continue, the market could improve in the latter half of the year.
Follow Us On Twitter:
What are you predicting for this year's spring homebuying season? Let us know. Email [email protected]. pic.twitter.com/yvhTrWTDP9
— The Mortgage Note (@TheMortgageNote) March 16, 2023
Read More Articles:
SECURE Notarization Act Receives Support By Industry Leaders
Commercial Spaces: The Future Of Malls
SVB Collapse: First Citizens Bank Acquiring Silicon Valley Bridge Bank