Why the housing market is going from tough to terrible

Mortgage rates are nearing 8%. Prices have climbed for the past three months straight. And there were fewer homes on the market in September than any September ever. No wonder home sales just hit a 13-year low. It is a crummy time to try to buy a house.

In unwelcome news to homebuyers, none of this is expected to change soon. Prices are expected to stay high, inventory is expected to stay low and rates may climb even further.

The current housing market offers a crushing affordability picture for would-be-homebuyers and is keeping many out of the market. And it has been steadily worsening for the past two years.

With the average 30-year fixed rate loan currently at 7.63%, according to Freddie Mac, it now requires a monthly principal and interest payment of $2,528 to afford a median-priced home with a 20% down payment, according to ICE Mortgage Technology, which recently acquired mortgage data provider Black Knight.

That is up 91% from two years ago and an increase of $1,204 a month, ICE found.

The monthly payment on an average-priced home now requires 40% of the median household income, making housing the least affordable it's been since 1984, according to ICE.

"The last time home affordability was this tight, interest rates were at 13.6% - roughly 6 points higher than today - and the average home price was about 3.5 times the median household income," said Andy Walden, vice president of enterprise research at ICE Mortgage Technology. "Today, after years of low interest rates helping to drive purchase prices up, the average home costs six times the median income."