Kevin Kelly, Chairman of the National Association of Home Builders (NAHB), recently explained that:
“With interest rates near historically low levels and strengthening job growth, now continues to be a great opportunity to buy a home.”
We couldn’t agree more. However, one must realize that, with prices and interest rates both projected to increase, waiting could be costly.
There are two organizations that look at the affordability of purchasing and actually measure it over time. The National Association of Home Builders has their Housing Opportunity Index (HOI) and the National Association of Realtors’ has the Housing Affordability Index.
Both indexes are reporting the same thing. The cost of buying a home is beginning to increase leading the affordability indexes to dip.
Both indexes say we passed the bottom of the housing market
According to NAHB’s HOI housing affordability dipped slightly in the second quarter of 2014. NAHB’s Chief Economist David Crowe explains:
“The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom.”
According to NAR in a recent Economists’ Outlook post, home affordability is down from both one month ago and one year ago in all regions.
Michael Hyman, Research Assistant at NAR said:
“At the national level, housing affordability is down for the month of June due to higher prices and qualifying income levels despite the lowest mortgage rates of the year.”
In a recent article, the Wall Street Journal also revealed that the cost of home ownership is higher than any time in over five years:
“Housing affordability hit its lowest level in nearly six years in June as home prices continued to climb.”
If you were waiting for the bottom of the market, you missed it. Yet, with prices below values of seven years ago in most parts of the country and interest rates near historic lows, it is still a great time to buy a home…but hurry!