Will Housing Affordability Improve?

Housing affordability in the United States experienced a slight improvement last year, marking the first positive shift in four years. A household earning the median income of $83,782 would have allocated 41.8% of their earnings toward monthly housing costs for a median-priced home, a modest decrease from 42.2% in 2023. Despite this progress, affordability remains significantly strained compared to the 30% threshold commonly deemed manageable.

Ralph’s Take

Will housing affordability improve in 2025? It’s difficult to predict, but mortgage rates are likely to play a key role. In 2024, the average mortgage rate was 6.72%, a slight dip from 6.87% in 2023. While modest, this reduction contributed to a minor improvement in affordability last year. Despite this progress, the market remains challenging for many buyers. Down payment assistance programs are becoming more widespread, but the ongoing inventory shortage continues to hinder accessibility. A continued drop in mortgage rates could reduce housing costs and inspire homeowners who have postponed selling to list their properties, thereby boosting inventory. Both are essential steps toward improving overall affordability.

Posted by Ralph Ragette Jr on

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