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Housing affordability inches up, but rates keep inventory tight

Economists at the Pacific Coast Builders Conference forecast mortgage rates near 6.3% to 6.5% in the near term, while supply constraints continue to limit resale options.

Reported · Written up by our desk · Residential

Affordability is improving modestly as incomes rise and price growth slows, but elevated mortgage rates and a lock-in effect are keeping resale inventory tight, according to economists speaking at the Pacific Coast Builders Conference in San Diego. HousingWire reports the discussion described a market caught between incremental gains for would-be buyers and persistent supply constraints, especially in the lower-priced entry-level segment.

At the event, Chris Thornberg of Beacon Economics and Danielle Hale of Realtor.com pointed to improving affordability but said limited inventory and higher mortgage rates remain key reasons for buyer hesitancy. HousingWire also linked the ongoing war in Iran to continued nervousness in the market.

The economists cited forecasts for the mortgage rate outlook: Thornberg’s team expected rates to stay around 6.3% to 6.5% in the near term, and John Burns Research and Consulting projected the 30-year fixed rate to average roughly 6.5% over the next three years. Over a longer horizon, JBREC expects it to sit around 6.3% to 6.4%, HousingWire said.

Thornberg also argued that public perception of the economy has drifted from economic reality, noting that while consumer sentiment is low, consumer spending is near record highs and unemployment remains low. HousingWire added that he warned longer-term risks could come from large federal deficits and an overvalued stock market rather than near-term headline drivers.

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