The housing outlook for the second half of the year is all about affordability – for buying and renting.
Home prices are still rising, but at a slower pace than this time last year. That cannot be said of mortgage rates, which are climbing up. The short supply of homes for sale shows signs of improving which is keeping prices high. At some point, the higher mortgage rates will hit affordability and could trump the short supply by taking out the heat in home prices.
Renters are unlikely to see much relief. There has been more multifamily construction recently and more units but demand is growing faster. Occupancy is at a record high which gives landlords strong pricing power. Renters do not appear to be turning into buyers, and that will most likely not change this quarter. High rents make it harder to save for a down payment.
The biggest change in the second half will likely be a sharper focus on mortgage credit availability. Lenders are facing new regulations that will make them ever more careful; rising rates, however, will make them hungrier for business. Independent lenders will likely take on an even bigger share as they tend to be more flexible and creative with the credit.
