The housing crisis persists with even the middle class getting priced out of the market this year thanks to climbing prices, mortgage rates and a major inventory crunch.
The market is short almost 320,000 home listings valued up to $256,000 — which is considered affordable pricing for middle-income buyers or households who earn up to $75,000 a year — according to an analysis from the National Association of Realtors (NAR) and Realtor.com, published in June.
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"Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership," NAR senior economist and director of real estate research Nadia Evangelou said in a news release).
Evangelou recommends a two-fold approach to help with low affordability and limited housing.
“It's not just about increasing supply,” she said. “We must boost the number of homes at the price range that most people can afford to buy."
Housing prices are still incredibly high
Home prices surged to a record high in May, according to a recent report from real estate data and analytics company Black Knight.
Black Knight vice president of enterprise research Andy Walden said five consecutive months of gains have “fully erased the pullback” in home prices that began in July 2022.
Redfin currently places the median home sales price at just over $426,000.
And mortgage rates have just climbed to 6.96% — their highest level since November 2022, when rates topped 7%.
This combination of high prices and mortgage rates have made housing increasingly unaffordable for the typical American. Middle-income buyers can now afford to buy less than a quarter of listings compared to five years ago when they could take a swing at about half of all available homes, according to NAR.
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What can prospective buyers do?
Experts say it’s necessary to increase inventory in order to bring home prices down.
"Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it's likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve," Realtor.com chief economist Danielle Hale told NAR.