Mortgage rates have been decreasing in recent weeks, but if they reverse course and start to rise again, more potential home buyers may get “priced out,” a new study from the National Association of Home Builders shows. About 1 million households would likely no longer be able to afford buying a median-priced new home if mortgage rates rise from 4.85 percent to 5.1 percent. Last week, the 30-year fixed-rate mortgage averaged 4.51 percent, according to Freddie Mac.
Many Americans shopping for a new home may be in danger of being priced out if prices rise by just $1,000, the analysis showed. Based on incomes, 127,560 households would not be able to qualify for a mortgage to purchase a new home if prices rose by $1,000, either due to a jump in mortgage costs or the new home price, researchers found.
Not surprisingly, the number of “priced out” households varies across states and metro areas. The NAHB found that Texas saw the largest “priced out” effects from a $1,000 home price increase; that could cause 11,152 households to have to leave the market. California followed at 9,897 and then Ohio at 7,341.