From early 2022 to late October, the U.S. weekly 30-year fixed-rate mortgage rose just above 3% to over 7% before leveling off at 6.42% at the end of the year. That sharp increase sent monthly mortgage payments from $1,925 on a median priced new home in early 2022 to $2,923 on the same house by the close of the year, a 51% increase, according to NAHB Eye on Housing.
As a result, only 20.3% of U.S. households could afford a median priced new home at October’s 7.08% rate, a share that will fall even further if more rate hikes are introduced in the year ahead.
When interest rates increased from 3.22% to 4.22% as of the middle of March 2022, the percent of households that can afford median-priced new homes decreased to 30.4% from 34.2%. The monthly mortgage payment, which includes principal and interest, but excludes taxes and insurance, for the same home increased from $2,165 from $1,925.
An increase from 4.22% to 5.22% as of early May 2022 priced additional 5 million households out of the market for the median-priced new homes.
Advertisement
Related Stories
Economics
Mortgage Rate Declines Could Boost Home Sales Following Months of Low Activity
Encouraging economic news bumped mortgage applications up by 2.6% for the week ending May 3
Affordability
American Families Are Spending a Quarter of Their Income on Mortgage Payments
The average monthly mortgage payment is up more than 9% year-over-year
Affordability
Is Fractional Homeownership Any Kind of Solution for Housing Attainability?
The imbalance between housing supply and demand is spurring some innovative options within the real estate industry
