Mortgage rates could fall below 6% and see less volatility in the year ahead, according to Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors (NAR). As inflation slows in the coming months, mortgage rates are expected to pull back from a peak 7% high, but remain double what they were a year ago, averaging 6.48% this week, NAR reports.
Though rates could drop steadily throughout 2023, prospective buyers are still holding off on home purchases and waiting for home prices to fall in tandem with interest rates, but the Fed’s inflation control methods may not have a substantial impact on housing costs for another year, experts say.
Affordability has been hammered by higher rates in recent months. Evangelou says the qualifying income for homeownership is now near the $100,000 threshold, which means only 32% of all households and 15% of all renters can afford to buy a median-priced home. The majority of these households are Gen Xers, whose median age is 51, she adds.
Advertisement
Related Stories
Affordability
How Much Income Do First-Time Buyers Need to Afford the Average Home?
The median-priced home is unaffordable in 44 of the 50 largest U.S. metro areas
Affordability
What Is the Relationship Between Urban vs. Suburban Development and Affordability?
A new paper from Harvard's Joint Center looks at whether expanding the supply of suburban housing could, in turn, help make dense urban areas more affordable
Off-Site Construction
New Study Examines Barriers and Solutions in Manufactured Housing
The study from Harvard's Joint Center looks at the challenges faced by developers using manufactured housing and how they're overcoming those barriers
