Home prices increased in most U.S. metros last quarter despite rapidly rising mortgage rates that are currently hovering near 7 percent, according to data released Thursday by the National Association of Realtors.
Nationwide, prices for an existing, median single-family home rose by 8.6 percent from last year to $398,500, although price growth is slowing significantly.
Seven of the top ten metros experiencing the biggest price gains were in Florida, where the typical price jump was more than 18 percent. And half of the nation’s most expensive markets were in California.
But NAR chief economist Lawrence Yun expects prices to reverse course.
"The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building," Yun said in a media statement.
NAR’s report also found a major spike in monthly mortgage payments.
Rising mortgage rates fueled by the Federal Reserve’s series of interest rate hikes to curb inflation have pushed affordability out of reach for many Americans.
"Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising," NAR Chief Economist Lawrence Yun said. "The median income needed to buy a typical home has risen to $88,300 – that's almost $40,000 more than it was prior to the start of the pandemic, back in 2019.”
Monthly mortgage payments have soared from pre-pandemic levels, rising by nearly 50 percent since 2019. These monthly payments have increased by more than $600, bringing the monthly payment on a typical single-family home to $1,840 after a 20 percent down payment.
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Mortgage rates surged past 7 percent this week after falling slightly last week. The 30-year fixed mortgage rate rose to 7.08 percent, according to data released Thursday by Freddie Mac.
“The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve," Sam Khater, Freddie Mac’s Chief Economist, said in a statement.
"Home sales have declined significantly and, as we approach year-end, they are not expected to improve.”
