ICE Mortgage Monitor: August Most Affordable Month Since February
(Image courtesy of ICE); Breakout image courtesy of Anna Tarazevich/pexels.com)
Intercontinental Exchange, Atlanta, released its mortgage monitor for September, finding that declining mortgage rates have brought home affordability to its best level in six months in August and boosted refinance incentives for many.
The principal and interest payment on the average-priced home purchase is $145 less per month than it was three months ago.
“Recent easing in mortgage rates brought some much-sought relief to prospective homebuyers,” said Andy Walden, ICE Vice President of Research and Analysis. “Along with a general cooling in home price growth, rates falling below 6.5% made August the most affordable month for housing since February”
However, the share of income needed to make payments on an average-priced home stands at 34.3%, notably above the 30-year-average.
“When it comes to affordability, as always, context is important: it still takes 10 percentage points more of the median income to buy the average house than it has on average over the last 30 years,” Walden continued. “Our own ICE Market Trends data shows that prospective homebuyers are also facing record high down payments and credit scores among recent purchase mortgages. Affordability is still very much a challenge and that is likely to continue for the foreseeable future, but August’s improvement is certainly welcome progress.”
Purchase loan demands did see a few pops throughout August due to the lower interest rates, but still remain low compared with last year, even when those rates were at similar levels.
Refinance-related rate locks were at the highest levels in more than two years mid-month. While the surge abated somewhat, the week of Aug. 23 still ranked as the second-strongest in the past two years.
Regionally, some results are mixed. Three of the top 100 largest markets are back to long-run average affordability levels–Birmingham, Ala., Des Moines, Iowa, and McAllen, Texas. Cleveland, Toledo, Ohio, Memphis, Tenn., and Baton Rouge, La., are all very close to those benchmarks as well.
Rising inventory rates have also pushed prices down in some areas, such as Florida.
“Florida is not alone,” Walden added. “Other areas where inventory has returned to or exceeded pre-pandemic norms also saw prices edge lower in July. Places like Austin, [Texas], San Antonio, [Texas], Memphis, [Tenn.], New Orleans and San Francisco. On the other side of that coin, inventory shortages persist in many parts of the Midwest and Northeast, where prices continue to push higher. Just look at Cleveland, Providence, [R.I.], Richmond, [Va.], and Chicago, which–along with Seattle–made up the top five performing metros in July from a home price growth perspective.”
