Nationwide, home prices continue to rise, but just barely. According to the recent S&P Case-Shiller housing index, home prices rose 0.5% nationally in May, compared to April. They were up 1.5% year over year. That contrasts with a pace of about 20% a year and a half ago. The slowing is almost entirely because of one thing: mortgage rates that recently have risen sharply. (These are America’s 25 least affordable housing markets.)
[in-text-ad]
A 30-year fixed-rate mortgage rate rose to 6.71% last week. People who own homes with much lower mortgage rates because they bought them several years ago have refused to give up what are fantastic mortgage deals. Joel Kan, Mortgage Bankers Association’s vice president and deputy chief economist, told CNN Business, “Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages.”
[nativounit]
How badly does a nearly 7% mortgage hit affordability? According to the National Association of Homebuilders, a mortgage payment on a $450,700 home would have increased from $1,925 in January 2022 to $2,923 in late October, when mortgage rates topped 7%.
[wallst_email_signup]
The difference in monthly payments is so huge that many people will be forced to wait until the Federal Reserve brings rates down, which could take two or three years due to a slowing economy. These people will stay in their current homes or rent until then.
[recirclink id=1179119]
At least the supply of available homes is low. If not for that, home prices would be plunging. That may be the only way people can afford a home at a 6.7% mortgage rate. Based on current trends, that will not happen.
Mortgage Costs Just Got Much Too Expensive
© blackred / E+ via Getty Images
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
Top Gaining Stocks
Top Losing Stocks