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Homebuyer’s monthly payment up almost 20% from a year ago. Here’s how much it costs

Housing market sales dragging, but real estate prices are sticking high

SHARE Homebuyer’s monthly payment up almost 20% from a year ago. Here’s how much it costs
Homes in West Jordan are pictured on Monday, Oct. 10, 2022.

Homes in West Jordan are pictured on Oct. 10, 2022.

Scott G Winterton, Deseret News

This time a year ago, the typical American homebuyer’s monthly mortgage payment was roughly $2,100 — expensive, yes, but interest rates were between 5% and 6%.

Fast forward to this summer, with interest rates now hovering around 7%, and the typical monthly payment has shot up 19%, to over $2,600.

That’s according to a recent Redfin report that gauged what the typical American home shopper’s monthly payment was during the four weeks ending July 30.

“Housing payments remain historically high because mortgage rates remain elevated, with weekly average rates clocking in at 6.9%,” the first week of August, Redfin analysts wrote. Now, they’re tracking even higher. As of last week, the average interest rate for a 30-year fixed mortgage was 7.5%, up nine basis points from the week before, according to Bankrate.com.

Even though high rates have stifled demand — slowing sales to a sluggish pace compared to the past several years amid the pandemic housing frenzy — national home prices have been fairly sticky due to low availability, though pandemic hotspot areas in the West have seen a more dramatic price correction. Idaho and Utah are among the top states with local markets to see the nation’s largest year-over-year home price declines.

Homeowners are reluctant to relinquish their low interest rates, some even below 3% for those who bought in 2021. The total number of homes for sale is down 19%, the biggest drop in a year and a half, according to Redfin. As for new listings, they’re down 21%.

Nationally, the median home for-sale price was up 3.2% year over year in July, the biggest increase since November, Redfin reported.

“Home prices are increasing because of the mismatch between supply and demand. High mortgage rates have pushed many would-be sellers out of the market, with homeowners hanging onto their relatively low rates,” Redfin analysts wrote.

Interestingly, even though high rates are deterring potential buyers, sellers have been chilled far more. Redfin’s Homebuyer Demand Index — which measures early-stage demand through requests for tours and other services from Redfin real estate agents — is down only 4% year over year.

Keep in mind, those are national figures. The U.S. housing market is continuing to undergo a divided real estate correction, with prices rising in the East, while prices are down in many areas in the West.