Housing Affordability Falls Two Months, Suggesting That Real Estate Market is in Recovery
The National Association of Realtors reported that the Housing Affordability Index (HAI) fell to 159.2 in June from 169.8 in May, due to a 4% increase in the median price for existing single-family homes ($174,600 to $181,600) and an increase in mortgage rates from 4.95% in May to 5.16% in June. Compared to the peak housing affordability of 178.8 in April, the June HAI is almost 20 points lower, but is still 35 points above the average of 124.3 (since 1989).
As the housing market recovers, we can expect gradually rising home prices, which will gradually lower housing affordability. In fact, the falling HAI over the last two months is a sign of a real estate market recovery.
Bottom Line: It's still the case that there has probably never been a better time to buy a house than right now, due to the combination of low home prices and low mortgage rates. And throw in a $8,000 tax credit for first-time home buyers, and it makes today's real estate market look even better.
4 Comments:
Note the following from Brian Sullivan of Fox Business: The existing home sales data trends indicate that the $8,000 tax credit does not appear to be having much of a positive impact, while new home sales have done reasonably better, in part because the new home sales companies are able to help bring buyers in by offering lower than market interest rates. In other words, the incentives are doing what they are intended to...
Weren't you celebrating higher house affordability a month ago????
No, it was three months ago, April 24 to be exact, unless there's one I missed.
Housing Affordability in CA Reaches Record High.
He sounds like a real estate agent. It's always a good time to buy (or sell). Most people don't follow the blog long enough to notice the inconsistencies or leave because of them.
Mark,
Right now you are celebrating the cyclical nature of the data. Home prices typically rise in the Feb-Jun time period each year. Look at your chart. You will see a drop in affordibility around this time of year in 2006, 2007, 2008 and now 2009. Median home prices in November 2009 will be lower than they were in June 2009.
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