Rising home prices and rents are also challenging would-be buyers to save for down payments.
NEW YORK – Many would-be buyers were already feeling stretched thin by home prices that increased during the pandemic, but at least mortgage rates were low. Now that they are high, some people are just giving up, since it’s currently less affordable than any time in recent history to buy a home, the Wall Street Journal said.
The Federal Reserve, which started raising rates aggressively early last year to curb inflation, has been hesitant about the idea of cutting them. Mortgage rates slipped to just under 7% this week, the lowest in several months, but they are still more than double what they were two years ago. Although home prices typically soften when high mortgage rates slow down home sales, this time they are not.
The U.S. median existing-home price rose to approximately $392,000 in October, the highest ever for that month in data that goes back to 1999. Roughly one-third of buyers this year were first-time homebuyers, below the historical average of 38%, according to the National Association of Realtors.
The median first-time buyer was 35 years old, the second-highest age on record, behind only 2022’s peak of 36 years old.
While rents are also on the rise, the cost of buying a home has risen by a lot more. The average monthly new mortgage payment is 52% higher in the U.S. than the average apartment rent, according to an analysis by CBRE, prompting some people to just abandon the idea of saving for a down payment.
Source: Wall Street Journal (12/11/23) Heeb, Gina
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