Despite recent dips in home sales and slower price appreciation, middle-class homebuyers are still feeling priced out of the market.
After years of sitting at historic lows, mortgage rates are rising, and coupled with continuing home price growth, buying a home is more expensive than current wage growth can support for a family earning the median income. As well, supply of homes for these buyers is short. CBS News reports that any rate increase has a big impact on homebuyers, adding hundreds to monthly housing costs. The share of homes affordable for middle-class families has decreased in 86 percent of the biggest metros in the country, per new research by real estate brokerage and listing site Redfin.
The Realtors' December sales report found that the median home price had risen just 2.9 percent in the past year to $253,600. This marked the first time since 2012 that home price gains were lower than increases in average hourly earnings, which have risen 3.2 percent in the past 12 months. But the gap between home-price growth and typical pay raises remains so wide that it could take the housing market several more months of lower price gains to adjust.