First-time home buyers caught in the middle. Rent cost is up so is the cost of purchasing a home. Check this now!

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Housing Affordability is the Lowest Since 2008

It has become challenging for first-time buyers as they are getting caught between rising rents and the cost of purchasing a home. As home prices continue to rise, buyers are faced with either increasing their budget for purchasing or potentially lowering their standards for the home they purchase.

According to the National Association of Realtors, first-time buyers represented 27% of existing-home sales in January. With mortgage rates above 4% and the highest they have been in three years, buyers with limited funds and budgets for housing are being priced out of the market.

The pandemic created a buying frenzy as the combination of record-low mortgage rates with people’s need for more living space to work remotely. At the same time, housing inventory plunged, and new construction was severely constrained due to supply chain disruptions.

Builder Applications Decline 1% From January

Mortgage applications for new home purchases declined by 1 percent in February from January. According to the Mortgage Bankers Association, applications for the same category are down 4 percent from the same time last year. The MBA Builder Applications Survey reported mortgage applications for new home purchases declined by 3.9 percent compared to a year ago.

“New home purchase activity slowed in February, as for-sale inventories remained tight and mortgage rates increased to their highest levels since 2019,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “February is typically the start of the spring homebuying season, but applications to purchase a new home was down on a monthly and annual basis.”

Homebuilder Confidence Remains High

Builder confidence continues to remain strong. The only thing hindering the pace of new construction is the speed at which builders can obtain materials. There continues to be robust demand for new construction throughout the United States.

According to the National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence topped out in late 2020 but has remained in the record-high territory since then.  

Next week’s potential market-moving reports are:

  • Monday, March 21st – No Reports
  • Tuesday, March 22nd – No Reports
  • Wednesday, March 23rd – New Home Sales
  • Thursday, March 24th – Initial Jobless Claims, Continuing Jobless Claims, Durable Orders
  • Friday, March 25th – Pending Home Sales

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.