- Housing affordability dropped in March as low inventory kept home prices elevated, the MBA said.
- New listings of homes for sale dropped over 20% in April compared to a year earlier, Redfin reported.
Housing affordability has come down this spring, thanks to home prices staying elevated despite higher mortgage rates.
Mortgage payments for applicants jumped over the course of March, increasing 1.6% to $2,093 from $2,061 the previous month, according to data from the Mortgage Bankers Association.
"The affordability index hit a new survey high last month, with both the typical purchase application amount and monthly payment rising on a monthly and annual basis," MBA's associate vice president Edward Seiler added in a statement last week.
That's largely due to low inventory in the housing market, the MBA said, which has kept home prices high despite downward pricing pressure that usually comes with higher mortgage rates. Rates on the 30-year-fixed mortgage have hovered around 7% for months, making current owners reluctant to sell as it could mean financing a new home at a higher rate. The rate on the average 30-year fixed mortgage was 6.88% on Tuesday, according to data from Bankrate.
And while inventory is low, it isn't showing signs of getting much better. New listings of homes for sale dropped over 20% in April compared to a year earlier, Redfin reported, marking the steepest drop in housing inventory since the pandemic.
But mortgage rates could begin to ease and potentially revive some housing activity, the MBA said, as markets expect the Fed to pause or pull back on interest rate hikes later in 2023. Central bankers raised rates over 1,700% in the past year to lower inflation, a move that's influenced mortgage rates to move higher as well.
"While many prospective buyers currently remain on the sidelines, MBA expects mortgage rates to decline slowly as the year progresses, which will help with affordability and may spur sales activity," Seiler said.