A month and a half ago, when mortgage rates were exploding higher with the 30Yr fixed mortgage rate averaging 4.5%, the highest since 2018 and up more than nearly 100bp from the December average of 3.26%, we said that "Housing Affordability Is About To Crash The Most On Record", and warned that the mortgage "rates shock" meant housing affordability would be down more than 25% yoy by March - a record decline - with additional downside from higher home prices.
Once again, we were right, and as CNBC reported overnight looking at the latest spike in mortgage rates, which just hit their highest level since 2009...
... and with home prices continuing to experience double-digit gains, all of the major housing markets in the United States are less affordable than they have been historically, and "affordability is near its worst point on record."
The average rate on the 30-year fixed started this year at 3.29% and hit 5.55% on Monday, according to Mortgage News Daily. Rates will move even higher after Wednesday's Federal Reserve meeting, when markets will get more commentary on the Fed's drive to curb inflation.
Citing research from Black Knight, a mortgage technology and data provider, CNBC shows that 95% of the 100 biggest U.S. housing markets are less affordable than their long-term levels. That figure was at 6% at the start of the Covid pandemic. And with thirty-seven markets already less affordable than they have ever been, expect this to soon spread to all markets... before we have another huge market crash just like in 2006.