Rising mortgage interest rates have not had an appreciable impact on housing affordability yet. Only in Washington, D.C., and Hawaii are current house prices unaffordable based on median home prices and median income levels.
The data comes from the latest research from CoreLogic Inc. (NYSE: CLGX), in which the research firm says, “Nationally, housing affordability couldn’t be better.” Housing affordability fell to its lowest point in June 2006, when prices were at their highest and mortgage interest rates were near 8%. The housing crunch that followed depressed prices and Federal Reserve monetary policy pushed mortgage interest rates below 4% last year.
Home prices have recovered somewhat, and mortgage interest rates have risen above 4% again, but barring a jump of 47% in home prices or an interest rate of about 6.75%, housing affordability looks to be on firm footing for some time to come.
According to the CoreLogic data, existing home sales have risen from 3.58 million in June of 2012 to 4.15 million in May of this year, while sales of new homes have fallen slightly, from 359,000 to 350,000. That latter figure indicates how tight the inventory of new homes has become and why homebuilders and most economists actually expect better home sales going forward.
In another sign of recovery in the housing market, sales of distressed properties have fallen from 21.2% of all sales in June of last year to 17.8% of all sales in May 2013.
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