The surge in home prices and sharp decline in the number of homes for sale have made home buying more difficult for many Americans compared with two years ago, according to a study from the National Association of Realtors released Monday.
At the end of last year, there were about 411,000 fewer homes on the market that were considered affordable for households earning between $75,000 and $100,000 than before the pandemic, the study found. At the end of 2019, there was one available listing that was affordable for every 24 households in this income bracket. By December 2021, the figure was one listing for every 65 households.
The study, the first of its kind from NAR, calculated affordability for different income tiers by assuming households use a 30-year fixed-rate mortgage and don’t spend more than 30% of their income on housing costs, including taxes and insurance.
Unlike traditional measures of housing affordability, which typically compare housing costs to incomes and mortgage rates, the NAR study also took into account the inventory of homes for sale at different price points. The study found that housing affordability worsened over the past two years for all but the very wealthiest Americans, and the shrinking number of homes on the market made home-buying more difficult in every income bracket.
The Covid-19 pandemic turbocharged the housing market, as buyers sought to take advantage of low mortgage rates and move into bigger houses. But the supply of homes for sale, which was already unusually low before the pandemic, plummeted. Home-building activity slowed and many potential sellers delayed their moves or were reluctant to sell.
Americans in the middle-class income levels experienced significant declines in buying power.
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