NAHB CEO Jim Tobin discusses the state of the housing market, American homeownership, and using family money for home down payment.
Mortgage rates have been falling for weeks as high inflation eases, but the housing market may continue to grapple with an affordability crisis for months to come.
Borrowing costs have retreated noticeably over the course of November as many investors believe the Federal Reserve is done hiking interest rates following two cooler-than-expected inflation reports last week.
Rates on the popular 30-year fixed mortgage fell to a two-month low of 7.44% last week, according to Freddie Mac, down from a high of 7.79% at the end of October but well above the pre-pandemic average of 3.9%.
MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU
Homes in Centreville, Maryland, on April 4, 2023. (Nathan Howard/Bloomberg via / Getty Images)
But affordability constraints are likely to persist: Rates are expected to remain elevated in coming months, as the Fed has hinted that it may hold interest rates at peak levels for longer than previously anticipated.
A new Bank of America analyst note authored by economist Michael Gapen suggested that lower mortgage rates do not necessarily translate into a more favorable buyers' market – and that renting versus buying a home remains the more affordable option.
HOME FORECLOSURES ARE ON THE UPSWING NATIONWIDE
«Although a small cooling in mortgage rates is good news, buyers should anticipate a higher-for longer rate environment,» the note said.
Homes in Hercules, California, on Aug. 16, 2023. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
As of October, rent was still cheaper than mortgages in all but two of 97 major metroRead more on foxbusiness.com