Most Americans cannot afford to buy the homes listed for sale in the U.S., real-estate brokerage Redfin said in report on Thursday.
An analysis of listings in 97 of the most populous metropolitan areas in the country found that just 15.5% of homes for sale in 2023 were affordable for the typical U.S. household. That’s a decrease from last year, when Redfin found that 21% of homes listed for sale were affordable for the typical buyer.
Redfin defines affordability based on the estimated mortgage payment equaling 30% or less of the average monthly income of residents in the local county.
Redfin isn’t the only real estate company pointing toward housing affordability troubles. Earlier this year, the National Association of Realtors said that middle-income households, or households with annual earnings of up to $75,000, can afford only 23% of the homes listed for sale in the U.S.
Researchers from real estate data provider ATTOM examined the median home prices for roughly 575 U.S. counties last year and found that home prices in 99% of those areas were out of reach for the average income earner, which ATTOM defined as someone who makes $71,214 a year.
What’s driving affordability issues?
Homes were in short supply this year. In June, Realtor.com said the number of homes for sale in 2023 decreased in 21 of the 50 largest metropolitan areas when compared to the same time period last year.
A surge in mortgage rates this year also led fewer homeowners to list their properties, because they feared that they would have to buy a new home at a rate of 7% or higher — more than double the typical rate during the pandemic, MoneyWatch reported. Slim inventory means that buyers are competing for a limited pool of housing, driving prices upward.
Will homes be more affordable in 2024?
There is some good news heading into next year. Housing inventory rose 7.5% year-over-year in November, according to Realtor.com. With more homes on the market, there’s more competition, which can potentially drive home prices downward.
Mortgage rates are slowly dropping after soaring this fall to their highest level in more than two decades. The 30-year fixed-rate mortgage remained below 7% for the second week in a row, Freddie Mac said Thursday. The downward trend comes after 17 consecutive weeks above 7%.
“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects,” Freddie Mac said. “A rise in homebuilder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”
Aliza Chasan is a digital producer at 60 Minutes and CBSNews.com. She has previously written for outlets including PIX11 News, The New York Daily News, Inside Edition and DNAinfo. Aliza covers trending news, often focusing on crime and politics.
Thanks for reading CBS NEWS.
Create your free account or log in
for more features.