Rising rates have been accompanied by an increase in real estate prices, which have also hampered real estate activity. According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), the combo of high prices and interest rates brought down housing affordability to a 10-year low in the second quarter of 2018.
Additionally, the national median home price jumped from $252,000 in the first quarter of 2018 to $265,000 in the second quarter — the highest quarterly median price in the history of the HOI series. However, summer homebuyers can still take advantage of the current rates as Freddie Mac cites that they have mostly been moving sideways rather than spiking upward.
“This stability is much needed for home sales, which have crested because of the multi-year run up in prices, tight affordable inventory and this year’s higher rates,” the government-sponsored enterprise noted in a blog. “Going forward, the strong economy will support the housing market, but with affordability pressures mounting, further spikes in mortgage rates will lead to continued softening in home price growth.”
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