Interest rates showed some relief this week for housing consumers, tipping down slightly to 6.78% from 6.96% for the 30-year fixed. That relief is welcome at a time when the St. Louis Fed is reporting there are tighter lending standards now for consumers seeking mortgages. Simultaneously, home prices have now hit the second highest amount recorded since January 1999.
For a home buyer, purchasing a home at $410,200 translates to a mortgage payment of $2,135. This is out of reach for many first-time buyers, as the median qualifying income would need to be $102,480. 33% of homes sold above the list price due to limited inventory. Bidding wars are likely to continue as single-family inventory hit the lowest level in 41 years. While new inventory is needed, lower rates would bring current owners out of their homes they may have outgrown, and into the market.