Simple supply and demand economics can be blamed for the seemingly endless increase in home prices. Low inventory and high buyer demand is a combination that had the median single-family home price increase 8.6 percent since last year. According to the National Association of Realtors affordability index, home prices are rising at a harmful pace compared to wages.
Lower mortgage rates are also aiding in the increase by not offsetting prices enough. Today’s rates are historically low with the current conforming no point 30-year fixed rates averaging 4.125 percent and 15-year fixed rates averaging 3.25 percent.
The index showed that housing affordability dropped from 161.2 last year to 159.7 in 2015. The decrease in affordability was seen nationwide with the biggest drop taking place in the Midwest and the smallest in the West at 5.8 and 2.6 percent respectively.
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 question may be featured in an upcoming article.