WASHINGTON – If you found the U.S. housing market impossible you were not alone. In fact, you were in the vast majority, according to a new analysis by the real estate group Redfin.

Just 15.5% of homes for sale were affordable for a typical U.S. household, the lowest share since Redfin started tracking this a decade ago. A home is deemed affordable if the estimated mortgage payment is no more than 30% of the average local monthly income.

Affordability plunged 40% from before the pandemic, and 21% from just last year. Redfin says spiking mortgage rates were a key reason why.

Normally, higher rates should push home prices down. But Redfin also finds the number of affordable home listings dropped sharply in 2023. That's partly because many people don't want to sell now and give up a much lower mortgage rate, and that tight market has helped keep prices high.

Redfin finds white households could afford far more listings than Hispanic and — especially — Black households, who've faced decades of housing discrimination. Only 7% of listings this year were affordable for a typical Black household.

There were also enormous geographic differences. The biggest drops in affordability were in smaller cities, including Kansas City, Mo., Greenville, S.C., and Worcester, Mass. The report says that's "because housing costs have relatively more room to rise, and local incomes are often climbing at a fraction of the pace that mortgage payments are."

By contrast, San Francisco's affordability was down only a smidge, but it could hardly have gone lower — just 0.3% of homes for sale in 2023 were affordable for the typical Bay Area household.

The U.S. affordable housing shortage is years in the making

Another reason for out-of-reach housing costs is a severe housing shortage that's years in the making. The U.S. has not built enough new homes since the housing crash of 2008 to meet demand, creating a deficit of millions of units. That's pushed up not only home prices but also rents, and the gap in affordability is worst for the lowest-income households.

Housing experts say this shortage and high prices are a main driver of record U.S. homelessness rates. In an annual count announced, the Biden administration said more than 650,000 people had slept outside or in shelters on a single night in January 2023. The number jumped 12% from the year before, and it came as much of the sweeping pandemic aid that had kept people from being evicted ran out.

More cities and states are loosening their zoning laws to encourage construction, a move they hope will eventually bring down overall prices. This year did see a record number of apartments under construction, although economists say it will take years to find a balance.

Still, for those who will still be in the homebuying market in the new year, the Redfin report finds some cause for optimism.

"Many of the factors that made 2023 the least affordable year for homebuying on record are easing," wrote Redfin Senior Economist Elijah de la Campa.

Inflation and mortgage rates have come down. And home prices are growing more slowly as more people list their homes for sale, a trend de la Campa expects to pick up after the holidays.

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