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A homebuyer on a $3,000 monthly budget has lost nearly $40,000 in purchasing power over the last year, as mortgage rates have risen from around 6.5% in October 2022 to nearly 8% today. The glimmer of hope for the housing market: a small September uptick in new listings.
Mortgage rates hit their highest level in more than 20 years this week, pushing homebuyers’ monthly housing payments to all-time highs. A buyer on a $3,000 monthly budget, for instance, can afford a $419,000 home with a 7.7% mortgage rate, roughly the daily average on October 4. That buyer has lost $38,000 in purchasing power since last October, when they could have bought a $457,000 home with a 6.6% rate. And by that time, buyers had already lost a significant amount of purchasing power since the start of the year, as mortgage rates doubled throughout 2022: A buyer on a $3,000 budget could have purchased a $595,000 home with the 3.5% rates common at the start of 2022.