Increasing Housing Affordability Opens Doors to Homeownership for More Americans
WASHINGTON — As America’s home builders celebrate National Homeownership Month in June, lower interest rates and home prices are boosting housing affordability across the country.
According to the latest NAHB/Wells Fargo Housing Opportunity Index, 66.5% of new and existing homes sold between January and the end of March were affordable to families earning the U.S. median income of $65,800.
“Now is a great time for consumers to buy homes,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “Both first-time and move-up buyers can take advantage of these favorable market conditions and start building their American Dream.”
The national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, average mortgage interest fell from 4.29 percent to 4.03 percent in the same period.
First-time home buyers also can find help qualifying for a mortgage with low-downpayment programs offered by Fannie Mae and Freddie Mac that are geared primarily toward the first-time home buyer market. These lenders now offer mortgages with 3% downpayments, allowing more creditworthy borrowers who lack the funds for a large downpayment to obtain a home mortgage.
As housing affordability continues to improve, more consumers can discover the benefits of homeownership, including the fact that it is a primary source of net worth for many Americans, and is an important step in accumulating personal financial assets over the long term.
The financial benefits of homeownership begin in the first year for most home owners, through the ability to deduct mortgage interest and property taxes paid off their taxable income. This can result in savings of thousands of dollars every year, especially in the early years of the mortgage when interest makes up the largest portion of the monthly payment.
In addition to the financial benefits to families, homeownership also strengthens communities. Home building increases the property tax base that supports local schools and communities.
“Homeownership builds stronger communities, provides a solid foundation for family and personal achievement and improves the quality of life for millions of people,” said Woods.