High rates and elevated prices are putting monthly mortgage payments at an all-time high, according to real estate platform Redfin, a development that points to the struggle prospective buyers are facing in the housing market.
For the week ending April 7, the median housing monthly payment rose 11 percent from a year ago to an all-time high of nearly $2,750, Redfin said.
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“Housing payments are soaring because home prices and mortgage rates are high,” Redfin pointed out.
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The median sale price is a little over $378,000, a jump of 4.5 percent compared to the same time last year. Redfin noted that this was $5,000 less than the record high of June 2022. The median asking price of close to $411,000 was 6.5 percent higher than a year ago, the biggest jump since October 2022. Meanwhile, Freddie Mac’s average mortgage rate has inched up closer to 7 percent over recent weeks. The daily mortgage rate tracker for the 30-year fixed rate has gone over 7 percent as of Thursday in what Mortgage News Daily said was the highest level since November.
Demand for homes is surpassing supply, which is pushing prices up, contributing to the increase in monthly payments.
“Even though supply is picking up–new listings rose 14 [percent] year over year–inventory is still low compared to typical spring levels, meaning there’s competition for many of the homes that are on the market,” Redfin noted.
Mortgage rates began to rise after the Federal Reserve raised interest rates in what analysts have described as the most aggressive pace of hikes since the 1980s. The central bank’s funds rate is now in a 5.25 to 5.5 percent range, the highest it has been in more than 20 years, and has increased borrowing costs across the economy including for home loans.
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Policymakers raised rates to fight off soaring prices. While inflation has declined from the 9 percent level it accelerated to in June 2022, the furthest level reached since November of 1981. But as the Consumer Price Index (CPI) this week came in at 3.5 percent, higher than the Fed’s target of 2 percent, economists are concerned that still-elevated inflation will compel the central bank to keep borrowing costs higher, for longer.
“For homebuyers, the latest CPI report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” Redfin Economic Research Lead Chen Zhao said in the platform’s analysis. “Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”
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