Lower mortgage rates are having an effect on the affordability of homes, more so than rising home prices. According to the National Association of Home Builders’ third quarter Housing Trends Report, 27% of homebuyers report being able to afford half or more of the homes listed in their market. Compared to one year prior, this is a 7% increase. On the other end of the spectrum, though, 72% of buyers can only afford a minority of homes in their markets. Generationally, Millennials’ ability to afford homes increased significantly year over year while Baby Boomers’ dropped.
Between the third quarters of 2019 and 2020, the share of buyers who can afford half or more of the homes available rose most significantly among Millennials (17% to 31%), but dropped among Boomers (23% to 19%). Across regions, the share rose most significantly in the Northeast (21% to 39%), but dropped in the Midwest (23% to 19%).