Houses Are Still Affordable in 2021

Photo by cottonbro from Pexels

 Even with the home prices on the rise, houses are still very affordable. The NAHB/Wells Fargo Housing Opportunity Index (HOI) explains that the historically low mortgage rates allow buyers to purchase at a higher price.

Homebuyers who purchased between October 2020 and the end of December 2020 with a U.S. median income of $72,900 purchased 58.3% of the new and existing homes that were sold during this time. This has been the lowest since seen since the fourth quarter in 2018.

In the fourth quarter of 2020, the average mortgage rates were reported at 2.85%. This helped offset the national median home price which HOI reported rose to $320,000 in 2020's fourth quarter. The mortgage rates dropped by 20 basis points in last year's fourth quarter.

Telecommuting has become a big part of American's work habits since the onset of the pandemic. The smaller markets are beginning to see an uptick in home sales. Cumberland-Md.-W.Va was reported to be the most affordable smaller market. Those earning a median income of $57,500 were able to purchase 96.4% of the homes that were sold in the last quarter of 2020.

The country's most affordable major housing market was Lansing-East Lansing, Mich. at number one with 89.9% of homes sold to those earning a median income of $75,000. The top five of the affordable major housing markets included Harrisburg-Carlisle, Pa.; Pittsburgh, Pa.; Scranton-Wilkes-Barre-Hazleton, Pa.; and St. Louis, Mo.

“While historically low mortgage rates are helping on the affordability front, there was a significant jump in year-over-year home pricing from 2020 to 2019, as inventory remained lean due to supply chain issues and the COVID-19 pandemic,” said NAHB Chairman Chuck Fowke. “Moreover, lumber prices remain extremely high and builders anticipate that regulatory costs are likely to rise, which will put even more upward pressure on home prices.”

Click Here For the Source of the Information.