The recent sharp drop in interest rates – 3.75% for a 30-year fixed mortgage - hasn’t had a positive impact on the housing market. Existing home sales are down 2% from the same period a year ago.
The primary cause for the decline is due to the fact that home prices continue to rise, which are up 60% since 2009 compared to household earnings, which only increased by 24%.
John Sim, an analyst at JPMorgan Chase who covers housing and mortgages noted, “Even at this current level of rates, its pretty unaffordable to most renters”.