Mortgage interest rates are now more than double what they were at the beginning of 2021. As a result, house price growth has begun to slow, but not enough to offset the increase in borrowing costs caused by higher rates. Home prices have skyrocketed in the US during the pandemic, and homebuyers are now hurting both high mortgage rates and expensive housing in parts of the country.
At the start of the COVID-19 pandemic, the Federal Reserve took aggressive action to keep the economy afloat. Mortgage interest rates began to fall steadily, with the average 30-year fixed rate hitting an all-time low of 2.65% in January 2021. However, inflation began to rise rapidly, and in March the Federal Reserve began raising interest rates. When gradual rate hikes proved insufficient to contain inflation, the Fed began to act more aggressively. In November, the average 30-year fixed rate briefly topped 7%, the highest level in more than two decades.
Due to rising house prices starting in 2020 and rising interest rates, mortgage payments have risen rapidly over the past year. The monthly mortgage payment for a home at an average price is now 66% higher than a year ago. According to Zillow, the national median home price rose from $318,432 to $357,544 from late November 2021 to late November 2022. At the same time, the average fixed mortgage rate for 30 years fell from 3.11% to 6.49%.
Both mortgage interest rates and home prices vary by geographic location. In addition, some parts of the country saw smaller declines in house prices than others. As a result, homebuyers in certain areas are much more affected by higher interest rates. Regionally, the Southeast experienced one of the largest increases in mortgage payments since last year. Of all the U.S. homebuyers in Florida have been hit the hardest by rising interest rates, with mortgage payments on a mid-priced home in Florida up more than 80% since 2021. South Carolina is close by, where mortgage payments are up 76%. %. While mortgage payments rose sharply in the US, growth was the smallest in Idaho and California, where mortgage payments rose 52.3% and 56.3%, respectively.
To determine where homebuyers are hit hardest by rising interest rates, Construction Coverage researchers analyzed the latest data from Zillow and Freddie Mac. The researchers ranked the states according to the percentage change in the monthly mortgage payment for a home with an average price from 2021 to 2022. average house price.
The analysis showed that the mortgage payment for a house at the median price in Texas a year ago was $944 but has since risen to $1,597, up 69.2% from last year. Overall, Texas residents are the 8th most affected by rising interest rates. Here is a summary of data for Texas:
- Percent Change in Mortgage Payment (YoY): +69.2%
- Total Change in Mortgage Payments (YoY): +$653
- Mortgage payment for a house at an average price (current): $1597
- Mortgage payment for a house at an average price (1 year ago): $944
- Average house price (current): $316,127
For reference, here are the statistics for the entire United States:
- Percent Change in Mortgage Payment (YoY): +65.8%
- Total Change in Mortgage Payments (YoY): +$717
- Mortgage payment for a house at an average price (current): 1806 USD
- Mortgage payment for a house at an average price (1 year ago): $1089
- Average house price (current): $357,544
For more information, detailed methodology, and full results, you can find the original report on the Construction Coverage website: https://constructioncoverage.com/research/cities-where-homebuyers-are-most-impacted-by-rising-interest. -rates-2023