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State & National Updates

Rising Rates, Higher Wages: A Counterbalance on Affordability

February 14, 2018


Rising Rates, Higher Wages: A Counterbalance on Affordability

Last week's labor market report, ostensibly showing positive news in the form of 2.9% year-over-year gains for earnings, increased volatility for stock prices as investors reassessed their outlook for market risk and interest rates. Wage gains are good news for rental and for-sale housing demand, but income growth without improvements for worker productivity can be inflationary. 


While inflation remains tame, it is showing signs of an increase. For example, the three-month moving average annual change of core CPI is now at 2.9%, the highest since August 2011. As a result, interest rates have increased significantly over the last month, with the 10-year Treasury bond near 2.9%. Higher rates for the 10-year Treasury will push up mortgage rates, with the 30-year fixed-rate mortgage now averaging above 4.3%


Rising rates increase the cost of buying a home with a mortgage. However, higher incomes are particularly helpful for home buyers saving for a downpayment and help counter the negative effect of higher mortgage rates on housing affordability. This environment can yield overall positive outcomes for housing, provided the wage gains are accompanied by improvement for productivity in the post-tax reform economy.


–NAHB Chief Economist Robert Dietz

Employment Conditions

Solid Job Growth in January

Labor Bureau reports employment rose by 200,000 last month. 

Construction Job Openings Decline 

Home builders and remodelers added 32,000 net jobs. 

Fed Survey: Concerns Exist Despite Economic Improvement

Lending standards have eased, but employment could be an issue. 

Employment Rose in 33 States in December

All but two states saw year-over-year growth. 

Industry Insights

Home Search Takes More Than 3 Months for Most Buyers

NAHB survey reveals key reasons why more shoppers aren't pulling the trigger. 

Driverless-Car Concept Gaining Favor Among Consumers

Most adults say they would consider buying a self-driving car. 

Single-Family Builders Score High on Energy Efficiency

Nearly 3 in 4 homes met or exceeded the threshold for an NGBS bronze rating. 

Housing Affordability Remained Flat in 2017

National median home price dipped slightly in the fourth quarter. 

Tiny Homes Might Have Potential Buyers

Poll shows millennials aren't the only ones interested in tiny homes. 

Economic Indicators

55+ Households Account for $62 Trillion in Net Worth

Key demographic holds two-thirds of the nation's home equity. 

Homeownership Rates Rise for All Minority Groups

Rates still vary significantly between races. 

Metro Areas Across the Country Show Continued Improvement

House prices have normalized in nearly 99% of metro areas. 

Inflation Steady with Growth in January

Broad-based measure is up 2.1% over the last year.

Interest Rates Tick Up

Measures to finance the tax cuts could continue to push up long-term rates.