Housing affordability will likely be a challenge in many markets this year as home prices continue to escalate, according to a new report by mortgage-financing giant Fannie Mae.
The main struggle for the economy and the housing market this year will be the “challenge of housing affordability coupled with expected modest economic growth,” Fannie Mae notes in its latest Economic & Strategic Research Group report.
Researchers predict an increase in household income and job security this year, while lending standards ease up and home buyers have easier access to mortgage credit. However, those strides will likely be offset somewhat by higher home prices, particularly in the lower-end of the market, that likely will continue to outpace household income growth. That could chip away at affordability, Fannie Mae states.
“We ended 2015 with a positive jobs report, an annual record high for auto sales, and the housing market poised to be the strongest since 2007,” notes Fannie Mae Economist’s Doug Duncan. “The first Fed funds rate hike since 2006 has had a minimal impact on mortgage interest rates so far, and we believe mortgage rates will edge up only gradually, ending the year around 4.2 percent.”
Source: “Fannie Mae: Housing Affordability Will Continue to be a Challenge in 2016,” HousingWire (Jan. 18, 2016)