About 87.5 million households are unable to afford a median-priced new home, according to data from the National Association of Home Builders. If the new-home market prices were to rise by just $1,000, an additional 117,932 would be priced out.

Mortgage rates also could further hamper household affordability. Many economists have predicted rates will rise over the course of this year.

NAHB researchers provide an example of how affordability erodes with rising rates: For a new home in 2022 with an estimated median price of $412,506 and a 30-year fixed-rate mortgage of 3.5%, an increase of one-fourth of a percentage point in the interest rate would price about 1.1 million households.

A table provided by the NAHB shows the number of households priced out of the market for a new home at the median price of $412,5050 based on fluctuations in interest rates.

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The percentage of homes with mortgages that have late payments or are in foreclosure has dropped to the lowest seen on record in more than two decades, according to CoreLogic’s data dating back to 1999. The nation’s overall delinquency dropped to 3.4% at the end of 2021, with the majority of states posting a year-over-year decrease in delinquencies, according to CoreLogic’s newly released Loan Performance Insights report.

Declining unemployment rates and higher home prices are helping more homeowners stay afloat. “National home prices increased by 18.5 percent year-over-year, helping more owners regain equity,” Molly Boesel, principal and economist at CoreLogic, writes in the report. “The combination of these dynamics pushed the overall mortgage delinquency and foreclosure rates to the lowest levels that CoreLogic has recorded in more than two decades.”

The data also reflects a time when pandemic-related forbearance aid was put in place to help financially struggling homeowners, although for many owners it had expired by the end of the year. U.S. employment has been robust and home equity levels have been on the rise, both of which have helped keep homeowners from going under. Lenders also reportedly have been stricter when issuing loans during the pandemic, ensuring it was to borrowers who were unaffected by hardships.

The majority of states saw a yearly decline in mortgage delinquencies, except for parts of Louisiana, which researchers attributed to damages from Hurricane Ida.

Otherwise, improvement in delinquency numbers suggested stronger loan performance across the board at the end of 2021. “The 30-, 60-day, and foreclosure rates are at the lowest that we’ve seen in a generation,” Frank Nothaft, chief economist at CoreLogic told the National Mortgage News. “What’s still elevated is the serious delinquency rate (90 days or more past due). Even though that’s way down from the peak we saw in 2020, it’s still above pre-pandemic levels.”

As for 2022 expectations, the data may not be as rosy coming off such low numbers. “There will be some distressed sales in the marketplace,” Nothaft says. “So we’ll see an uptick in that in 2022.” But rising home equity could help alleviate some possible distress as financially strapped homeowners may opt to sell instead.

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Homeowners across the board are feeling richer from rising home prices, but the wealthiest have enjoyed the largest gain, according to a report from the National Association of REALTORS®.

From 2010 to 2020, about 71% of the increase in housing wealth was in high-income households. Low- and middle-income households received a smaller share of housing wealth gains, according to the NAR report. Low-income homeowners comprise a smaller share of homeowners overall, while high-income homeowners make up the largest segment of owners.

Over the last decade, the housing value gap between households earning more than 200% of an area’s median income and those earning less has significantly widened, according to NAR’s report. High-income homeowners held 28% of all U.S. housing wealth in 2010, but by 2020, that percentage had grown to 42.6%.

“It’s a wake-up call,” Gay Cororaton, NAR’s senior economist and director of housing and commercial research, told The Wall Street Journal. “Policies have to be focused more on making sure that the lower-income and many more middle-income folks participate in the benefit of homeownership.”

Long-term homeownership has been shown to build wealth for households. The median homeowner realized $254,900 in wealth in 2019 compared to $6,270 for the median renter, according to the Federal Reserve’s Survey of Consumer Finances, as reported by The Wall Street Journal.

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Following two weeks of declines, mortgage rates edged up, and economists say that consumers should expect further increases over the coming weeks.

The Federal Reserve will likely raise its short-term interest rates at its meeting next week. While the Fed’s benchmark rates do not have a direct effect on mortgage rates, they do often influence them and likely will lead to an increase, the National Association of REALTORS® notes on its Economists’ Outlook blog.

But even though mortgage rates are rising, consumers should bear in mind that rates remain near historic lows. For comparison, in 1982 when inflation was rising roughly at the same pace as it is now, mortgage rates were 16% on average, Nadia Evanelou, senior economist and director of forecasting at the National Association of REALTORS®, writs on the association’s blog. This week, the 30-year fixed-rate mortgage averaged 3.85%, as a comparison.

The latest increase in mortgage rates comes as Treasury yields increase, notes Sam Khater, Freddie Mac’s chief economist. “Over the long-term we expect rates to continue to rise as inflation broadens and shortages increasingly impact many segments of the economy. However, uncertainty about the war in Ukraine is driving rate volatility that likely will continue in the short-term.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 10:

• 30-year fixed-rate mortgages: averaged 3.85%, with an average of 0.8 points, rising from last week’s 3.76% average. Last year at this time, 30-year rates averaged 3.05%.
• 15-year fixed-rate mortgages: averaged 3.09%, with an average of 0.8 points, rising from last week’s 3.01% average. A year ago, 15-year rates averaged 2.38%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.97%, with an average of 0.3 points, rising from last week’s 2.91% average. A year ago, 5-year ARMs averaged 2.77%.

Freddie Mac reports average commitment rates along with points to better reflect the total upfront costs of obtaining the mortgage.

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As many borrowers continue to emerge from forbearance due to pandemic-related aid, a government watchdog is encouraging lenders to help them avoid a potential foreclosure wave.

The Consumer Financial Protection Bureau says that as of March 1, more than 768,000 mortgage borrowers remain in active forbearance. Many of these consumers are at risk of foreclosure unless they receive loss mitigation assistance from their mortgage servicers, the CFPB says. With that in mind, the CFPB is urging greater distribution of the Homeowner Assistance Fund(link is external) to help homeowners avoid foreclosure. Lenders must work with state housing finance agencies and HUD-approved housing counselors to receive the funding. States have access to $9.961 billion in federal funding as part of the fund, which is intended to help homeowners recover from the impact of the pandemic. Funding is available through the program until Sept. 30, 2025.

The fund is a federal program that provides money to states, tribes, and territories to assist homeowners with housing-related costs. Consumers can use the money to pay their mortgage. This could allow struggling homeowners to enter loan modifications with lower payments. “The CFPB is closely monitoring servicer conduct to ensure that they are complying with all applicable federal consumer financial laws and assisting consumers with resolving delinquencies and preventing avoidable foreclosures,” the bureau said in a statement. “As part of this monitoring, the CFPB will continue its heightened review of mortgage servicing complaints, including in particular complaints about challenges working with servicers to use HAF funds.”

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