![Housing availability level in the USA is at the minimum since 2006](https://storage3.florida.realestate/static/files/53r63/800-sunny-isles-beach-miami-florida-usa-march-24-2021-multistory-modern-building-downtown_480x320.jpg)
According to the recently published statistics, the availability of residential property has hit the record low since 2006. This is caused by the growing mortgage rates and an unprecedented hike of house prices.
In summer 2022, the National Association of Realtors reported that the housing affordability level (an indicator that takes into account median prices of existing homes, median household income, and average rates on mortgage loans) dropped to 102.4 this July. It has remained at the same level since then – the lowest since July 2006, when it fell to 100.5 shortly before the real estate bubble burst in 2008. The number of homes foreclosed by banks for failure to pay back the loans also increased drastically because of lending practices of large banks.
Due to such a decline, the real estate market is becoming increasingly less available for people buying their first home. Fresh data shows that the average house prices reached a record high of $428,700 this July.
Meanwhile, a standard payment under a loan increased to over $1,850 per month. In January, it was $1,297 and a year ago, only $1,220. The payment thus grew by almost 50% in less than 6 months. It is significantly higher than the average monthly payment under the mortgage before the pandemic, which was $1,400 – $1,500.
The housing availability crisis occurred after a period of relative affordability in 2020 – 2021 caused by the record-low mortgage rates, although prices were still growing to satisfy the higher demand.
This year, however, shortly before the federal government made a decision of raising the interest rates to combat the record-high inflation, banks increased the mortgage rates to offset their forthcoming losses caused by the decreasing dollar exchange rate.
In June, the rate on 30-year mortgages (the most popular type of home loans) surged to 5.78% over a single week. This is the record growth since 1987. The rate eventually increased to 5.83% by July.
Such a surge caused significant cooling of the US residential property market. Sales of existing home have been declining for four months in a row in May, as potential buyers don’t have enough money.
Due to the falling demand, the growth of house prices is supposed to peak by the end of the year, which could be followed by a slump, economists warn.