Could This Be the Last Affordable Spring Home-Buying Season for a While?

Mortgage rates have dropped to the lowest levels since before the 2016 presidential election. During the week ending Feb. 6, the 30-year fixed-rate mortgage averaged 3.45%. This shows a decrease of six basis points from the previous week, Freddie Mac FMCC, -0.31% reported.

Mortgage rates have continued to drop for three consecutive weeks. The last time the 30-year fixed-rate mortgage was at or below this level was in October 2016, when it averaged 3.42%.

According to Freddie Mac, the 15-year fixed-rate mortgage also fell three basis points to 2.97%. This was also the first time since 2016 the average rate for the 15-year fixed home loan fell below 3%. However, the 5/1 adjustable-rate mortgage increased eight basis points to an average of 3.32%.

“As rates fell for the third consecutive week, markets staged a rebound with increases in manufacturing and services sector activity,” Sam Khater, Freddie Mac chief economist, said in the report. “The combination of very low mortgage rates, a strong economy and more positive financial market sentiment all point to home purchase demand continuing to rise over the next few months.”

Could this be the last affordable spring home-buying market?

This rising demand is expected to speed the start of the spring home-buying season, which is typically the most popular time of year to sell or purchase a home.

A new report based on research from and the National Association of Realtors indicates that buyers who manage to score a deal this year will be lucky, as affordability is expected to will only worsen in the years to come.

“The number of metros across the country seeing improvements to home affordability continues to increase,” Sabrina Speianu, senior economist research analyst at and the report’s author, wrote. “However, this spring homebuying season may be the last to see gains to affordability in quite a while.”

Housing affordability improved across all income levels nationwide in the fourth quarter of 2019, though the biggest gains in affordability were experienced among those in high income brackets. 87 out of the 100 largest metropolitan areas nationwide saw affordability improvements in the fourth quarter.

Low mortgage rates largely affected the rise in affordability, but several other factors also played a role, including increasing household incomes, falling home listing prices and inventory increases in some markets. Nationwide, Tulsa, Oklahoma experienced the biggest downturn, while DesMoines, Iowa saw the largest improvement in affordability.

Without considering future global economic events or changes in Federal Reserve policy, interest rates are expected to stabilize in 2020, the report said. “With stabilizing interest rates, only income growth or increased construction of affordable homes can provide continued increases to home affordability,” Speianu wrote. “However, income growth has historically failed to keep us with home price growth and home builders have yet to reach normal levels of building activity despite recent optimism.”