Home prices continued their steady rise in the second quarter of 2016, which boosted homeowner equity for the first three months of the year. The parent company of RealtyTrac, ATTOM Data Solutions, reported on Thursday that 6.6 million properties were seriously underwater, an 11.9% share of total properties at the end of the second quarter. That is down 12% from the first quarter and down 13.3% from last year this time. “Rising home prices are lifting all home equity boats: bailing out seriously underwater homeowners and enriching homeowners who already have positive equity,” said Daren Blomquist, ATTOM Data Solutions senior vice president.
The National Association of REALTORS® reports that home prices increased in the second quarter, outpacing wage growth. The median existing single-family home was $240,700, up nearly 5% from the second quarter of 2015 ($229,400). The rising gap between prices and wages has caused affordability to decline, despite mortgage rates being just above all-time lows. Due to this gap, the homeownership rate has been declining and is at the lowest rate since 1965, now at 62.9%.
Freddie Mac reported that mortgage rates edged higher in the latest week, but continue to hover just above all-time lows. The 30-year fixed conventional rate ($417,000 or less) rose to 3.45% with 0.5 in points and fees. Last week's strong jobs report pushed investors into more risky assets, such as Stocks. When Bond prices decline, mortgage rates tend to push higher.