The affordability of a home has several components – primarily price, interest rate, taxes and association fees. The only one of these factors expected to grow significantly in 2019 is interest rates.
While a buyer might take a step back over spending 2-3% more in price, a 1/2 point rise in interest rate is around 10% in additional cost.
Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019.
Historical view of interest rates over the last 45 years.
Rates are still half of what they were just 15 years ago, but they’re going up in 2019 which may have more impact on your total cost than price itself. If you’re planning to buy in 2019, start the process now before the next rate increases.