Home Affordability Hits 15-Year Low, Passing ‘Infl…



An increasingly unaffordable home market is affecting homebuyer decisions and altering forecasts for price growth in the months to come, according to a new forecast by Zillow.

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Zillow has dropped its forecast for home-price growth over the next 12 months as buyers grapple with the most unaffordable landscape in at least 15 years.

Monthly mortgage payments in April took up 28 percent of a recent homebuyer’s monthly income — near the 30 percent threshold generally considered an upward bound of affordability, according to a new report from the Seattle-based listing portal.

That’s the highest share of income devoted to mortgage payments since at least 2007, which is as far back as Zillow’s records go. Another measure of affordability kept by the Atlanta Federal Reserve suggests the previous low point for affordability occurred in July 2006.

“It will take time to confirm, but for now the trend appears to show that the market passed an inflection point for home values between April and May, transitioning from ever-hotter to somewhat-cooler price growth,” the report reads. “This deceleration is a clear signal that buyers are dialing back their demand for homes in the face of daunting affordability challenges.”

In the months since those numbers from April were recorded, mortgage rates and home prices have only continued to climb, even as wage growth has flattened out.

As mortgage rates moved upward, the typical mortgage payment after a home purchase in early June would amount to…




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