Home prices continued their climb in March pushing prices close to all-time lows with regard to affordability, according to the latest data from Black Knight…(Black Knight)
- M-O-M: Home prices rose 3.0% in March alone, this was the fifth time during the pandemic era that homes increased by more than 2% in a single month.
- Y-O-Y: Annual home price gains actually slowed slightly in March, seeing 19.9% annual appreciation, down from the upwardly revised 20.1% in February.
With rising mortgage rates and record-high home prices, affordability is close to record lows. The median income required to make the principal and interest (P&I) payment on the average-priced home is now 32.5%.
- Home affordability hit a record low in July 2006 when P&I hit 34.1% of the median income.
NOTE: As of April 21, Black Knight reported the average mortgage rate at 5.11%. If rates rise 50 basis points more or home prices rise 5%, that would push affordability to its worst level on record.
As home affordability falls, wannabe buyers are fighting back. The Wall Street Journal reported that more borrowers are paying fees to cut their interest rates and making higher down payments to lower the amount they have to finance. “People buying homes under construction are choosing to lock in today’s rates rather than risk even higher ones later…And more home buyers are considering home loans that carry lower rates in their early years.” (Wall Street Journal)