Are Homes Becoming More Affordable? Insights from Recent Studies

The housing market is continually evolving. This makes navigating the complexities of real estate
a daunting challenge for potential homebuyers, especially when it comes to understanding the dynamics of affordability. It’s no secret that rising home prices and mortgage rates have made ownership more and more difficult the past few years. However, recent data from both industry-leading property and real estate experts Attom and the Mortgage Bankers Association (MBA) suggests that there may be a glimmer of hope for those looking to purchase a home.

A Shift Toward Greater Affordability

For several years, rising interest rates have made homeownership less accessible. However, with the Federal Reserve’s recent decision to cut rates, there are signs of a shift. According to Attom’s third-quarter 2024 report, the combination of decreasing mortgage rates, increasing wages, and slower growth in home prices has led to a slight improvement in affordability. This means that the cost of owning a home now represents a more manageable portion of a typical household’s budget.

As Rob Barber, CEO of Attom, points out, while the housing market remains challenging, the current trends suggest a movement toward greater affordability.

“Home affordability continues to show signs of easing, which lightens the pressure on house
hunters struggling to find a place that fits their budget,” says Rob. “The cost of owning a home across much of the nation remains a tough go for average workers, exceeding levels preferred by banks and other lenders. But it is at least tracking in the right direction. That’s mainly because of declining interest rates.”

Mortgage Payments on the Decline

The MBA’s latest Purchase Application Payment Index further supports these findings, revealing a 5.2% decrease in the median mortgage payment between July and August. This decline is evident across both FHA and conventional loans. 

According to Edward Seiler, associate vice president of MBA, “Homebuyer affordability conditions improved for the fourth consecutive month, with lower mortgage rates, rising incomes, and slower home-price growth giving prospective buyers’ budgets a much-needed boost.”

Regional Variations and Future Outlook

Despite these positive signs, housing affordability continues to be a pressing issue, especially in specific regions. Single-family homes and condominiums remain less affordable than historical averages in 99% of the counties analyzed.

Navigating the Improved Landscape

While challenges remain, the current trends in housing affordability are promising. At CUSO, we are dedicated to helping you not only understand market dynamics and housing trends, but more importantly, also helping you find a mortgage solution that fits your needs. Whether you’re buying your first home or looking to invest in real estate, our experienced and knowledgeable team is ready to provide the guidance and support you need to make informed decisions about your next home.

For more insight into the real estate market and to explore all your mortgage options, contact one of our loan experts today.

Study/article reference:

Attom press release for third-quarter 2024 U.S. Home Affordability Report

MBA’s latest Purchase Application Payment Index

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