Aug. 6 (UPI) -- This week mortgage rates hit their eighth record low for the year, but affordability is still down from the first quarter.
Home affordability is down as rising home prices negate the low mortgage rates amid buyers high demand with a housing shortage.
Nationwide, 59.6% of new and existing homes sold from April to June were affordable to families earning an adjusted median income of $72,900 compared to 61.3% of such homes in the first quarter, the National Association of Home Builders/Wells Fargo Housing Opportunity Index shows.
The second-quarter reading on affordability is also the lowest in 18 months even with adjustment to median income estimates to account for the COVID-19 pandemic. The index was based on the national median home price rising to $300,000 from $280,000 as average mortgage rates fell 27 basis points.
U.S. home sales rose nearly 21% in June after three months of decline amid the pandemic. By the end of June, housing inventory was down 18.2% from a year ago, with only a four-month supply left of inventory at the current sales pace, according to the National Association of Realtors.
"Even with attractive rates and rising demands, banks have continued to tighten lending standards in July, further restricting available credit," realtor.com senior economist George Ratiu said. "At this pace, tighter lending standards and low inventory will squeeze housing activity and we will see a substantial slowdown in sales in the second half of this year."