Redfin Predicts US Housing Affordability May Take Decade to Recover
Redfin reports that the US housing market could take over ten years to return to normal affordability levels due to high mortgage rates and home prices.
The Redfin real estate firm reports that the United States housing market may take a decade or more to return to normal affordability levels. The company defines this threshold as an average mortgage payment-to-income ratio of 30% or lower, a benchmark the market has not achieved since August 2018.
Under a scenario where mortgage rates stay between 7% and 8% and home prices grow by 2.1% annually, affordability is unlikely to recover for at least 10 years. A more optimistic timeline suggests a recovery by 2029 if mortgage rates drop to 6% and home prices remain flat. Recent data from Freddie Mac shows the average 30-year fixed mortgage rate reached a three-year high of 7.4%, while the S&P CoreLogic Case-Shiller US National Home Price Index hit a record 337 in July.
Redfin senior economist Asad Khan noted that many house hunters feel stuck between stretching themselves to buy at current rates or waiting for lower rates only to see prices climb further. Despite these barriers, Redfin observes a shift toward buyers, with seller concessions appearing in 45% of August home sales.
