Mortgage rates continued to remain roughly stable for the last 4 weeks, despite volatility in bond yields. Specifically, the 30-year fixed mortgage rate slightly fell to 3.10% from 3.11% the previous week. It seems that while there is certainly a concern about the impact of the omicron variant on the economy, investors are optimistic that it won’t have any significant impact on markets. Meanwhile, the Fed’s potential faster tapering and inflation are also among the factors that will affect mortgage rates in the upcoming weeks. U.S. inflation figures will be available on Friday, while the Fed’s meeting will follow next week. A higher inflation and a faster tapering process could rise yields and mortgage rates. NAR forecasts the 30-year fixed mortgage rate to average 3.2% in December.

In the meantime, home prices continue to rise as housing supply remains low. According to NAR, in October home prices rose 13% while housing inventory dropped 12% compared to a year earlier. As a result, current homebuyers are having difficulty in finding a home to purchase as there are not enough homes for sale that they can afford to buy. Take a look below at the share of homes a household earning $100K could afford to buy now versus 2 years ago.

Share of homes available for sale that a household earning $100K can afford to buy

Active Listings

Available homes for sale for a household earning $100K

October 2021

57%

611,930

348,800

October 2020

62%

789,250

489,340

October 2019

65%

1,310,900

852,090

Thus, due to weaker affordability and lower inventory, there are about 503,000 fewer homes available for sale that this household can currently afford to buy compared to 2 years ago. While housing supply isn’t expected to rise significantly anytime soon, some of these would-be homebuyers may rent instead of buying a single-family home. There are currently 11.3 million single-family homes that are renter occupied across the country. Nevertheless, the conversion of a single-family home from owner-occupied status to rental status has major implications on the number of homes available for sale in the future, decreasing housing supply even further.

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.