ICE: Homebuying Affordability Sees Best Conditions in 2.5 Years
(Image courtesy of Jason Gooljar/pexels.com)
ICE Mortgage Technology, Atlanta, released its October Mortgage Monitor report, highlighting that conditions have pushed home affordability for buyers into its best spot in 2.5 years.
Mortgage rates have recently eased somewhat, averaging 6.26% in mid-September.
Under such conditions, the monthly principal and interest payment on an average-priced home has fallen to $2,148, or 30% of the median U.S. household income. That’s an improvement from 32% earlier in the summer and 35% in late 2023, but is still about 5.4 percentage points above the long-run average.
“The recent pullback in rates has created a tailwind for both homebuyers and existing borrowers,” said Andy Walden, head of mortgage and housing market research at ICE. “We’re seeing affordability at a 2.5-year high, which is beginning to bolster purchase demand, while creating more opportunities for homeowners to lower their monthly payments with a rate-and-term refinance loan.”
Annual home price growth was 1.2% in September after eight months of slowing. ICE pointed to falling inventory and improved affordability as driving the newer growth.
Listings are about 17-19% below 2017-2019 norms, as sellers are delaying sales in some markets to avoid price cuts.
The average credit score for purchase locks has climbed above 736, the highest recorded in six years of data.
Debt-to-income ratios for purchase rate locks have dropped to 38.5%, their lowest level in 2.5 years. For rate-and-term refinances, the average DTI has fallen to 34.1%, a 3.5-year low. But, for those seeking such refinances, the average credit score is at 722, a nine-month high.
We’re firmly in the U.S. hurricane season, and ICE also provided an analysis of flood risk and insurance trends.
The report found that 5.3 million–or 12%–of mortgaged single-family homes in the U.S. have some level of flood risk in the case of a 100-year event. About 85% of borrowers with flood risk don’t carry flood insurance, and another 6% may be underinsured.
