Housing consumers have a bit of relief this week as the 30-year fixed mortgage interest rate dipped lower to 7.5%, falling one-quarter of a percent and hitting the lowest point in a month.
Despite this, home buyers are facing a more expensive housing market than last year. Based on NAR’s Quarterly Report released today, home prices for single-family existing homes increased annually in 82% of markets. With elevated mortgage interest rates and the rise in home prices, buyers are facing the most challenging affordability conditions since the Housing Affordability Index started in 1989.
The 10-year treasury has also shown declines over the last week, averaging 4.5% after brushing 5%. The spread continues to be wider than the historical norm, with room to narrow, which would further help home buyers.
The U.S. needs more affordable housing inventory, and the Fed should strongly consider reducing the Fed Funds rate. In this housing market, homeowners continue to be the winners and gain the housing equity that would-be buyers desperately want.