Home affordability has not improved as much as expected this year, disappointing buyers looking to purchase a home of their own. Last year, buying a home was extremely challenging due to high listing prices and the highest mortgage rates in decades. The third quarter of 2023 was the least affordable market in nearly 40 years, according to the National Association of Realtors.
Heading into 2024, experts predicted that affordability would improve significantly, mainly because of declining mortgage rates. However, a strong economy has kept inflation high, making rate cuts less likely. As a result, mortgage rates have been steadily rising, reaching nearly 6.9% as of mid-April.
Despite higher borrowing costs, property prices have not fallen due to a persistent housing supply shortage. This has forced buyers to either pay more and refinance later or wait for a better deal. In February, home prices increased in 87 of the 104 largest US real-estate markets, with 27 markets seeing price gains of at least 10%.
Jersey City, New Jersey saw the largest price increase at 26.5%, with property values doubling in less than seven years. Price gains were seen across the country, with the most expensive markets predominantly located in the West. Thirteen of the 14 priciest markets were west of the Rocky Mountains, with seven of the eight costliest cities in California.
Buyers are facing challenges in finding affordable homes, as prices continue to rise in many markets.
