Affordability

Mortgage rates continued their upward trajectory, with potential buyers facing affordability and low inventory issues as the spring home buying season begins to ramp up.

While inflated home prices continue to dampen demand, home sales fell to a more than seven-year low in January, as rising rates continue to weaken home affordability.

According to a new report from Realtor.com, U.S. housing markets continue to struggle with a significant shortage of new homes, a result of more than a decade of under-building in response to population growth.

"It seems straightforward: We need to build more homes," said Dr. Skylar Olsen, Zillow's Chief Economist.

Senators Ben Cardin (D-MD) and Todd Young (R-IN) have introduced a new initiative to help revitalize communities, announcing some 500,000 homes could be constructed, renovated and sold under the bipartisan bill.

After three weeks of consecutive declines, mortgage application volume took a sudden turn upward this week, despite mortgage rates nearing the 7% mark.

The Fannie Mae Home Purchase Sentiment Index decreased nearly four points in February, as homebuyers and sellers expressed concern over current home-selling conditions, returning the index closer to its all-time survey low recorded in October 2022.

“While 2023 kicked off on a more optimistic note for the U.S. housing market, recent mortgage rate volatility highlights how much uncertainty remains,” said Selma Hepp, Chief Economist at CoreLogic.

In a letter to President Joe Biden, Sen. Sherrod Brown, Chair of the Senate Banking Committee, has requested that the Administration utilize a “whole-of-government” approach to address housing affordability nationwide.

“With higher mortgage rates deterring many rate locked-in homeowners from selling, free-and-clear homeowners may hold the key to unlocking some much-needed supply for today’s housing market," said First American VP and Deputy Chief Economist Odeta Kushi.