In June 2019, the median sale price for a single-family home rose to $235,433, an increase of +3.3% y/y, according to CoreLogic. Simultaneously, the Typical Mortgage Payment, the monthly loan payment including ONLY principal and interest on a median priced home, fell -6.1% due to an approximate -0.8 percentage point annual decline in mortgage rates.
Homebuyers breathed a collective sigh of relief for this welcomed affordability after experiencing double-digit home purchasing costs in 2018. (Median home prices were up +5% y/y in June 2018 and the Typical Mortgage Payment rose y/y each moth with gains averaging 13%.)
After nearly three years of these annual increases each month, the Typical Mortgage Payment fell y/y in May 2019 almost 3 percentage points and that collective sigh of relief was audible.
Beyond this Typical Mortgage Payment decline over this past year, many homebuyers are “better off” financially this year compared to last year due to modest annual income gains. According to HIS Markit, real personal disposable income averaged approximately +3.3% during the first two quarters of 2019.
Focusing on home price appreciation and the Typical Mortgage Payment, CoreLogic predicts annual gains in home prices each month to average +4.5% from July 2019 through June 2020. CoreLogic also suggests that the annual change in the Typical Mortgage Payment each month over this same 12-month period will average out to a decline of -4.4%.
During the last six months of 2019, CoreLogic’s Home Price Index and Home Price Index Forecast suggests that the Typical Mortgage Payment will decline some -7.6%. This forecast is driven by expectations that the rate of a 30-year fixed mortgage on a median priced single-family home will be approximately -0.7 percentage points lower than in 2018.