Real Estate

Mortgage rates hit another record low, but homes still less affordable


A for sale sign is seen next to a house in Arlington, Virginia on May 6, 2020.

Andrew Caballero-Reynolds | AFP | Getty Images

Mortgage rates fell to another record low this week, the eighth record set this year. But home affordability is weakening as the housing shortage, high demand from buyers and rising home prices negate the benefits of lower rates.

Only 59.6% of new and existing homes sold in the second quarter of this year were considered affordable to families earning an adjust median income of $72,900, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. That’s down from 61.3% in the first quarter of 2020 and is the lowest reading in 18 months. NAHB did make an adjustment to median income estimates to account for the coronavirus pandemic.

The index based its calculations on the national median home price jumping to a record $300,000 from $280,000 and average mortgage rates falling 27 basis points.

The inventory of existing homes for sale at the end of June was down 18.2% annually, according to the National Association of Realtors, leaving just a 4-month supply available. Supplies of newly built…

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