Cost of Buying a Home Hits Record High as Mortgage Rates Jump in U.S.

Cost of Buying a Home Hits Record High as Mortgage Rates Jump in U.S.

Residential News » Los Angeles Edition | By WPJ Staff | April 23, 2024 8:20 AM ET

This past week, the average daily mortgage rate climbed to over 7.4%, marking its highest point since last November 2023, influenced by an unexpectedly high inflation report and confirmation from the Federal Reserve that interest rate reductions would be postponed.

Concurrently, home prices have also ascended, with the median sale price of U.S. homes rising by 5% over the past year to $380,250, narrowly missing the record high set in June 2022 by just $3,095. This surge in both mortgage rates and home prices has pushed the median monthly housing payment for homebuyers to an unprecedented $2,775, an 11% increase from the previous year.

Despite the escalating costs, data shows that potential homebuyers remain active. Mortgage applications for home purchases have increased by 5% from the previous week, and Redfin's Homebuyer Demand Index -- a gauge of tour requests and other services from Redfin agents--has reached its highest level in seven months. Chen Zhao, the lead economic researcher at Redfin, noted that some prospective buyers are eager to secure homes now due to fears of further rate hikes, while others have adjusted to the high rates by lowering their budget for home prices.

"Home sales are not as brisk as they typically are, but transactions are still occurring," observed Connie Durnal, a premier Redfin agent in Dallas. "I've interacted with several prospective buyers who have been considering homes for years as they watched mortgage rates rise. Many express regret for not purchasing last year, as both prices and rates are now even steeper. My advice to them is straightforward: If you're financially able and find a home that captivates you, don't hesitate - buy it now, since there's no certainty that rates will decline soon."

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