Mortgage Rates Continue to Drop, As Does Affordable Housing Supply

August 7, 2020
Aerial view of suburb with houses and lawns
By Sam Foster

Mortgage rates decreased again this week to another new low, but the shortage of homes presents a growing issue: a shrinking supply of affordable homes. In addition, home prices have begun to rise. According to CNBC, 59.6% of new and existing homes sold in the second quarter of this year were considered affordable to buyers with median incomes of $72,900. This the lowest percentage in 18 months and a drop from first quarter’s rate of 61.3% What does this mean for sales during the remainder of 2020? Read more to find out.

The index based its calculations on the national median home price jumping to a record $300,000 from $280,000 and average mortgage rates falling 27 basis points.

The inventory of existing homes for sale at the end of June was down 18.2% annually, according to the National Association of Realtors, leaving just a four-month supply available. Supplies of newly built homes also fell 14.5% annually, according to the U.S. Census.

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