Home Buyers Monthly Costs Spike By 20%

According to a recent report, the increased mortgage rates and home sale prices have resulted in a 20 percent increase in the costs of owning a home compared to last year, USA Today reported.

A report from the real estate listing company Redfin released last Friday found that the typical American homebuyer’s monthly mortgage payment for the four weeks ending on July 30 was $2,605, down $32 from the month’s record high but still 19 percent higher than the same period last year.

The median price for home sales was $380,250, up 3.2 percent from the previous year and the largest increase since November 2022, Redfin reported.

According to Redfin, the increase in home prices is largely due to the mismatch between demand and supply with the total number of homes on the market dropping by 19 percent as homeowners cling to lower mortgage interest rates.

Likewise, increased mortgage rates are also having an impact on prospective buyers, with early-stage demand dropping by 4 percent compared to last year. However, homebuyers are not as deterred as potential home sellers by the higher interest rates, according to the report.

In the last week of July, the average rate for a 30-year fixed mortgage was 6.9 percent, a 0.1 percent increase from the previous week, according to Freddie Mac.

In a press release last week, Freddie Mac’s chief economist Sam Khater said the mortgage rate increase was due to the “upbeat economic data” coupled with the US credit rating downgrade announced by Fitch last Tuesday.

Khater said home prices have increased despite higher mortgage rates and lower demand “due to very low unsold inventory.”

According to the National Association of Realtors, at the end of June, the total housing inventory for the US was 1.08 million, down 13.6 percent from the year before.