2 Trends Helping Keep Housing Affordable

Two positive trends have started to emerge that impact the 2019Spring Housing Market. Mortgage interest rates for a 30-year fixedrate loan have dropped to new lows, right as reports show thatwages have increased at their highest rate in decades!

These two factors have helped keep housing affordable despitelow supply of houses for sale driving up prices. FirstAmerican’s Chief Economist, Mark Fleming, explains the impact,

“Ongoing supply shortages remain the main driver ofthe performance gap as the housing market continues to face aninventory impasse – you can’t buywhat’s not for sale.

 However, an unexpected affordability surge,driven primarily by lower-than-anticipated mortgage rates, risingwages and favorable demographics, has boosted housingdemand.”

Mortgage interest rates had been on the rise for most of 2018before reaching their peak in November at 4.94%. Accordingto Freddie Mac’s PrimaryMortgage Market Survey, interest rates last week came inat 4.20%.

Average hourly earnings grew at an annual rate of 3.2% in March,up substantially from the 2.3% average pace seen over the last 10years.

These two factors contributed nearly $6,000 worth of additionalhouse-buying power for median households from February to March2019, according to FirstAmerican’s research. Fleming is positive about theprolonged impact of lower rates and higher wages.

“We expect rising wages and lower mortgage rates tocontinue through the spring, boosting housing demand and spurringhome sales.”

Bottom Line

Low mortgage interest rates have kept housing affordablethroughout the country. If you plan on purchasing a home this year,act now while rates are still low!