Housing affordability plummets as savings lose value in 2021

The combination of rising prices and climbing mortgage rates is making it increasingly difficult for homebuyers to afford a house. Data shows that a homebuyer's dollar goes about half as far as it did at the end of 2020. Mortgage rates have increased significantly, with the average interest rate on a 30-year fixed-rate mortgage now at 7.63%. Additionally, the median sale price of a single-family home has risen to over $416,000. The affordability index has dropped to its lowest level since October 1985. The shortage of homes for sale and the reluctance of homeowners to sell and buy at higher interest rates have further exacerbated the housing market challenges.