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New Study Shows Home Prices Inching Farther Out Of Reach

By Dan Green

A deeper look at the March Housing Starts report shows weakness in the single-family housing market; today’s mortgage rates for conforming, VA, USDA, jumbo, and FHA mortgage loans; and, a National Association of REALTORS® report that points to worsening home affordability nationwide.

Home Builders Building Fewer Single-Family Homes

Census Bureau - Housing Starts - Growella
U.S. Single-Family Housing Starts

When you’re looking for news, it’s good to go deeper than the headlines. And, this month’s Housing Starts report shows why.

A housing start is when a builder begins construction on a new home, usually marking by “breaking ground” and, according to the U.S. Census Bureau, Housing Starts climbed two percent nationwide as compared to the month prior.

It’s the second-highest reading for Housing Starts in 10 years on a seasonally-adjusted, annualized basis.

A deeper look at the data shows weakness, however.

Housing Starts are reported as part of the Census Bureau’s monthly New Residential Construction report, and starts are split into three categories: single-family homes, multi-unit homes of between 2-4 units, and apartment buildings comprised of five units or more.

In the March report, buildings with five or more units provided the strength, boosting the headline figures. In contrast, single-family starts were weak. They dropped four percent and are now at their lowest levels of the year.

News like this matters because buyers buy single-family homes almost always. Detached properties, condos, townhomes, row homes — these are the property types most households will purchase.

2-4 unit homes get bought, too, but house hackers and real estate investors represent a smaller subset of the overall markets; and, almost none of us buys an entire apartment building at a time.

So, when we look at the U.S. Housing Starts data, it’s the single-family that matters most and single-family starts are down.

Expect fewer new construction homes for sale between now and early-2019.

Today’s Mortgage Rates

Mortgage Rate Trends - Growella
5-Day Mortgage Rate Trend

Looking for a mortgage rate quote today? You’re going to get worse pricing as compared to before the weekend.

Sometimes, that’s just how mortgage rates work.

Interest rates are higher for all mortgage loan types:

The actual mortgage rate quote you get from a lender will depend on your credit score, your loan size, your state of residence, and about a dozen other factors.

You can also affect your rate by talking to multiple lenders.

Studies show that talking to two lenders can result in savings of $2,000 or more as compared to talking with one lender only; and, talking to additional mortgage lenders can push your savings higher.

Talk to multiple lenders before locking in to find your best combination of rates, fees, and service.

Aggressive Mortgage Rate Quotes

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Home Affordability Depends On Where You Live

National Association of REALTORS® Affordability Distribution Curve and Score - April 2018 - Growella
NAR: Home Affordability Drops In April

More than seven million homes will sell this year and nearly every buyer’s search will have started with some variation of question: “How much home can I afford to buy?“.

Home affordability matters and, according to the National Association of REALTORS®, fewer homes are affordable for buyers of homes nationwide.

The data comes from the group’s Realtors® Affordability Distribution Curve and Score report which tracks homes currently listed for sale, and matches their likely monthly payments to the incomes of expected buyers for that home.

This methodology helps the trade group’s tracker account for homes in all markets, at all price points. It’s as effective in high-cost cities  such as San Francisco and Los Angeles as in cities where costs are lower, including Chicago and Atlanta.

The most recent report shows affordability down slightly; wage growth has failed to keep up with the pace at which home prices and mortgage rates have climbed.

However, like everything in real estate, “how much home can I afford?” is not a question that’s answered on the national level. It’s answered locally and individually.

What you can afford to buy, living in Seattle, is different from what might fit your budget in Sacramento. And, the same is true for any two city pairs you choose.

Home affordability is unique to you and where you live. Your wages matter and does your home’s sale price, its real estate taxes, its homeowners insurance, and the mortgage rate you get from your lender.

Skip the national stats when it comes to real estate and home affordability. Talk with a local real estate agent. Get help to find a home you can love, with a payment you can like.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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