The nation's unemployment level is down to 4.1 percent according to the Labor Department. Wages have also been growing at the fastest rate since the recession. As a result, more Americans are looking to buy a home. National home prices climbed again in December, driven by increased demand and limited supply.
A robust economy has led to concerns about the possibility of ensuing inflation which could be a precursor to rising interest rates. Increases in mortgage rates coupled with already high home prices will continue to erode affordability in many housing markets.
"The housing market has become somewhat dependent on low interest rates," said Daren Blomquist, an economist with industry analytical firm ATTOM Data Soluations. "It's going to be an adjustment for the industry to deal with even marginally higher interest rates."
Today conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent while 15-year rates are near 3.875 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.