Most Americans Still Cannot Afford a House Despite Falling Mortgage Prices

Even as wages increase and mortgage rates decline, Americans still cannot afford a home in more than 70% of the country, according to a report.

A report from ATTOM Data Solutions found that out of 473 U.S. counties that it analyzed, 335 of them have median home prices higher than what typical wage earners can afford.  Among those examined by the report are counties that cover Los Angeles and San Diego in California, as well as Maricopa County in Arizona and Miami-Dade County in Florida.

The report said New York City has the most significant portion of a person’s income to buy a home. While typical wage earners nationwide need to spend only about a third of their income on a home, Brooklyn and Manhattan residents must allocate more than 115% of their income.

Recently, Freddie Mac’s statement that the average rate of 30-year fixed-rate mortgage dropped to 4.06% with an average 0.5 point for the week. This figure is down from last week’s average of 4.28%. A year ago, in the same period, the 30-year fixed-rate mortgage averaged 4.40%.

The Federal Reserve’s worries about the possibility of slowing economic growth caused jitters to investors, which instigated the fall in interest rates, Sam Khater, chief economist for Freddie Mac, said.

Mortgage rates in February were around 4.5%, lower than the 5% range set last November, but not as low as the present figure. Closed home sales surged in February but were still lower year-to-year. February pending home sales was somewhat lower monthly and about 5% lower annually.

This fall in mortgage prices prompts Khater to expect a sustained rise in purchase demand. Mortgage applications to buy a home surged last week reflected Khaler’s forecast after seeing rates fell.

However, homebuyers are still complaining of high home prices and lower supply of homes for sale. Even though home price gains are shrinking, entry-level buyers still cannot afford some markets.