Last year, the housing market posted its best numbers since 2007. Still-favorable affordability conditions, led by low mortgage rates, resulted in a strong year for home sales. But with the Fed's decision to raise interest rates and the continuing climb of home prices, there is increasing concern that housing affordability may become an issue for prospective home buyers in 2016. So how are things likely to play out? According to Fannie Mae's most recent Economic & Housing Outlook, the Fed's rate hike hasn't had much of an impact yet, so wage growth and home prices are the most important factors to watch. “Despite our expectation of only a small rise in mortgage rates, home price and income dynamics should inhibit home purchase affordability,” Duncan said. “In addition, continued rent increases will hinder renters' ability to save for down payments. Therefore, we believe the pace of improvement in total home sales should moderate to 4 percent in 2016.” Still, Duncan expects an increasing number of single-family housing starts this year, which may provide some relief in markets where low inventory is pushing prices upward. Also, continued gains in job security and household income – along with eased lending standards – could help balance the effects of higher home prices and allow more Americans to pursue their dreams of homeownership.