Mortgage rates continue to move down. According to Freddie Mac, the rate on a 30-year fixed mortgage dropped to 6.33% from 6.59% the previous week. Housing affordability rose about 8% in the last 4 weeks as mortgage rates moved closer to 6%. If inflation continues to slow down, mortgage rates may stabilize near 6% in 2023.
With a 6% mortgage rate, housing will become more affordable for many buyers. While the typical family cannot currently afford to buy a median-priced home as the qualifying income exceeds earned income, housing will become affordable again for Americans if rates hover near 6%. In this scenario, the typical family will earn about $1,000 more than the income needed to purchase a mid-priced home.
With more buyers back in the market, the housing market may turn around at the beginning of the new year.