A trend that’s helped force U.S. homeownership to a 50-year low might finally be running out of steam.
According to a new report from Zillow, a real estate marketplace, incomes are now rising faster than home values for the first time since 2011. The data shows that home values have been growing at a 5 percent annual rate since the beginning of the year, outstripped by 2015’s income growth of 5.3 and 5.4 percent for family and nonfamily households respectively.
Federal Reserve Chairwoman Janet Yellen said at a news conference last week that monetary policymakers expect wages to improve further in the months ahead, which could help to mend homeownership rates that recently hit their lowest levels since 1965.
While the Fed’s keeping a close eye on incomes, its decisions also affect prices: the eventual interest rate hike, which policymakers declined to make at this month’s meeting, will moderate home prices even more. While wages are outpacing home values, “it’s worth noting that they have a lot of catching up to do,” said Svenja Gudell, Zillow’s chief economist.