Despite inching down in recent months, mortgage rates and payments remain at near-record highs
Source: Construction Coverage analysis of Freddie Mac and Zillow data | Image Credit: Construction Coverage
It’s been more than two decades since homebuyers in the U.S. faced interest rates comparable to current levels. Despite a slight decline from its late 2023 peak of 7.8%, the average 30-year fixed mortgage rate today of approximately 6.8% remains at the highest level since 2002 and more than 2.5 times higher than the record lows of early 2021. While this uptick has led to a slight decrease in home prices, the reduction has not been significant enough to offset the increased borrowing costs associated with the higher rates.
For perspective, over the past two years, average mortgage rates climbed 80%, from 3.8% to 6.8%. At the same time, median home prices rose from $316,778 to $347,716. Taken together, this has resulted in the monthly mortgage payment for a median-priced home growing by $634, from $1,175 to $1,809.