It’s not just people who are looking to buy a house that are feeling the pinch of the housing market. Mortgage rates have been rising, and it’s leading homeowners tp feel the pinch too.
Redfin, a national real estate brokerage, released data in April that found that the “typical” mortgage for a U.S. homeowner has skyrocketed in the last year. Just how much? By 39%, or about $664 a month.
That not-insignificant jump mirrors a housing market in which low supply, high building costs, and inflation have led the costs of homes to skyrocket as well. (Other data published last week found that just 14% of new builds put on the market in March 2022 sold for less than $300,000.)
Per Money, monthly mortgage payments for houses with a “median asking price of $404,950” were nearly $2,500, or $2,349 to be exact, for the period between March 27 and April 24. The average mortgage rate right now is 5.1%, compared to just 3% a year ago.
Increasing mortgage payments squeezes everyone from homeowners to buyers and has become yet another ballooning item on the budget list from the rising cost of groceries to gasoline to rent (which, in some cities, has jumped as much as 40% over last year).
But the mortgage rates rising might be a sign of things to come — namely, a cooler housing market, even if it remains largely unaffordable.
Some changes have already been seen: A National Association of Realtors report from April found that existing-home sales had dropped to the lowest number in a year since last February as interest rate hikes spiked and price tags on homes are pushing first-time and middle-class buyers out of bidding wars.
Still, with just 14% of new builds going for less than $300,000 in March and the median price for a pre-owned home going for more than $375,000, the average home is out of reach for most Americans, and a slower or cooler market won’t solve all of those problems.