The cost of a mortgage is up 20% since December

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Apr 20, 2022, 08:00 ET

Higher mortgage rates are compounding affordability challenges for home shoppers, but the market continues to move at a remarkable pace

Monthly mortgage payments on the typical U.S. home are 19.5% higher than they were three months ago, and 38% higher than a year ago.
Annual home value growth set a record for the 12th month in a row. The typical U.S. home is worth $337,560, up 20.6% from a year ago.
Buyers remain ready to pounce on any inventory that hits the market. For-sale inventory and newly pending sales each grew 11.6% from the month prior, and typical time on the market decreased two days from February.

SEATTLE, April 20, 2022 /PRNewswire/ -- Home shoppers are facing a one-two punch this spring: Quickly rising mortgage rates are compounding affordability challenges that have been brought on by record home value growth. The cost of a 30-year mortgage on the typical U.S. home is now 19.5% higher than it was just three months ago, according to the March Zillow® Real Estate Market Report.ⁱ Despite this, the pace and volume of sales picked up in March, showing the depth of the pool of home buyers willing and able to meet current asking prices.

Zillow logo (PRNewsfoto/Zillow Group)

The typical U.S. home is worth 20.6% more than it was a year ago, the 12th straight month in which a new record for annual home value growth has been set. Mortgage rates, which were below 3% a year ago, entered March at 3.51% and rose as high as 4.54% during the month.ⁱⁱ Combined, rising home values and mortgage rates have pushed the monthly payment on the typical U.S. home 38% higher than it would have been a year ago, assuming a 30-year mortgage with a 20% down payment.

"Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking," said Jeff Tucker, Zillow senior economist. "Record low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices climbed quickly. March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace, and the answer was 'So far, yes.' There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth, but for now, there is plenty of fuel in the tank as home shopping season kicks into gear."

One bright spot for home shoppers is that the long-awaited seasonal inventory boost finally came in March. After six consecutive months of dwindling inventory — a streak that lasted longer into the year than is typical — 11.6% more homes were available in March than in February, the largest one-month jump in Zillow's records.ⁱⁱⁱ

Still, inventory is 22.5% lower than it was a year ago, and the roughly 754,000 homes that were on the market in March represent a figure lower than in any month on record before January 2022. The number of newly listed homes in March jumped 35.8% from February to about 386,000, but that remains 8.5% lower than last March's pace of new listings.

Buyers proved they remain ready to gobble up any inventory that comes their way. Newly pending sales rose 11.6% in March from February — the exact same increase as inventory — demonstrating that demand is still outstripping supply, even with higher mortgage rates. The speed of sales also picked up in March, accelerating to nine days for the typical sale, down from 11 in February.

Zillow's home value forecast now calls for 14.9% growth through March 2023, down from a year-ahead forecast of 16.5% growth made in February. Zillow's existing home sales forecast has been lowered as well, to 6.09 million sales in 2022, which would mark a slight decline of 0.5% from 2021. Affordability headwinds — led by sharp mortgage rate increases — have strengthened faster than expected, but these figures still represent a remarkably competitive housing market in the coming year. Annual home value growth of 14.9% would have been the highest ever recorded by Zillow before June 2021, and 6.09 million existing home sales would mark the second-best calendar year total since 2006.

Rents may have hit a turning point. The typical U.S. rent grew 16.8% year over year to $1,904. That's down from 17.2% annual growth in February, marking the first slowdown in annual rent growth since February 2021. The rapid rise in rent prices over the past year has stretched affordability in much of the country and made it harder for potential first-time buyers to save for a down payment.

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI YoY Change	Monthly Mortgage Payment on a Typical Home**	Monthly Mortgage Payment on a Typical Home YoY Change	Inventory MoM Change	Inventory YoY Change	Zillow Observed Rent Index (ZORI)	ZORI YoY Change
United States	$337,560	20.6%	$1,316	38.0%	11.6%	-22.5%	$1,904	16.8%
New York, NY	$590,839	12.4%	$2,304	28.6%	12.9%	-26.8%	$2,934	20.2%
Los Angeles, CA	$911,892	20.1%	$3,556	37.4%	14.6%	-26.0%	$2,853	15.7%
Chicago, IL	$300,651	14.3%	$1,172	30.7%	14.9%	-26.1%	$1,842	12.0%
Dallas–Fort Worth, TX	$370,501	29.3%	$1,445	48.0%	13.9%	-25.1%	$1,709	18.2%
Philadelphia, PA	$322,475	13.8%	$1,257	30.1%	12.6%	-16.1%	$1,775	12.1%
Houston, TX	$293,387	21.3%	$1,144	38.8%	1.7%	-28.0%	$1,527	12.9%
Washington, D.C.	$543,698	11.4%	$2,120	27.4%	21.1%	-18.3%	$2,127	12.4%
Miami–Fort Lauderdale, FL	$422,639	26.3%	$1,648	44.5%	1.5%	-44.7%	$2,832	32.6%
Atlanta, GA	$360,679	30.0%	$1,406	48.7%	8.6%	-28.2%	$1,886	19.2%
Boston, MA	$635,813	14.6%	$2,479	31.1%	44.3%	-30.9%	$2,725	11.9%
San Francisco, CA	$1,461,773	20.1%	$5,700	37.4%	26.3%	-9.1%	$3,118	11.2%
Detroit, MI	$234,015	15.1%	$912	31.7%	14.0%	-10.3%	$1,372	10.5%
Riverside, CA	$568,579	28.2%	$2,217	46.7%	11.5%	-1.3%	$2,561	18.0%
Phoenix, AZ	$453,110	30.2%	$1,767	48.9%	6.4%	-9.0%	$1,921	23.7%
Seattle, WA	$771,631	24.8%	$3,009	42.8%	37.5%	-17.7%	$2,151	17.1%
Minneapolis –St. Paul, MN	$369,107	12.3%	$1,439	28.4%	16.7%	-15.7%	$1,610	7.0%
San Diego, CA	$902,655	27.8%	$3,520	46.2%	17.9%	-19.0%	$2,840	19.5%
St. Louis, MO	$235,436	15.4%	$918	32.0%	20.1%	-23.0%	$1,232	11.4%
Tampa, FL	$352,962	33.1%	$1,376	52.3%	10.2%	-20.6%	$2,029	28.1%
Baltimore, MD	$366,129	11.6%	$1,428	27.6%	18.3%	-9.3%	$1,764	11.6%
Denver, CO	$627,072	24.3%	$2,445	42.2%	30.5%	-4.6%	$1,905	15.7%
Pittsburgh, PA	$209,200	14.3%	$816	30.8%	11.7%	-11.9%	$1,333	8.9%
Portland, OR	$569,065	19.2%	$2,219	36.4%	21.2%	-15.6%	$1,804	13.0%
Charlotte, NC	$362,509	29.6%	$1,413	48.2%	9.2%	-29.9%	$1,724	17.9%
Sacramento, CA	$605,595	22.3%	$2,361	39.8%	19.1%	-1.4%	$2,236	12.8%
San Antonio, TX	$322,243	24.9%	$1,256	42.8%	-0.4%	-30.0%	$1,417	15.7%
Orlando, FL	$364,611	29.1%	$1,422	47.7%	6.1%	-30.9%	$1,951	24.7%
Cincinnati, OH	$250,986	15.4%	$979	32.0%	15.6%	-15.7%	$1,443	10.7%
Cleveland, OH	$208,407	15.6%	$813	32.3%	16.7%	-12.4%	$1,287	9.7%
Kansas City, MO	$278,453	16.9%	$1,086	33.8%	15.2%	-9.1%	$1,277	11.2%
Las Vegas, NV	$427,786	32.4%	$1,668	51.5%	7.5%	-13.2%	$1,828	22.7%
Columbus, OH	$284,813	16.7%	$1,111	33.5%	15.1%	-18.4%	$1,387	10.4%
Indianapolis, IN	$259,032	20.4%	$1,010	37.7%	12.3%	-14.0%	$1,427	13.1%
San Jose, CA	$1,674,427	23.9%	$6,529	41.8%	33.6%	-16.9%	$3,133	11.7%
Austin, TX	$589,627	42.7%	$2,299	63.2%	17.1%	-11.8%	$1,808	21.6%
Virginia Beach, VA	$314,133	14.8%	$1,225	31.3%	12.9%	-19.1%	$1,575	12.9%
Nashville, TN	$423,105	31.5%	$1,650	50.4%	13.8%	-32.1%	$1,788	20.4%
Providence, RI	$432,307	17.2%	$1,686	34.0%	23.3%	-24.0%	$1,799	15.2%
Milwaukee, WI	$261,710	11.7%	$1,020	27.7%	12.6%	N/A	$1,175	7.6%
Jacksonville, FL	$345,220	31.1%	$1,346	49.9%	3.5%	-22.0%	$1,724	21.6%
Memphis, TN	$220,487	20.9%	$860	38.3%	11.1%	-8.2%	$1,496	14.8%
Oklahoma City, OK	$207,622	17.8%	$810	34.8%	9.0%	-19.6%	$1,298	12.6%
Louisville, KY	$232,861	14.2%	$908	30.6%	14.2%	-10.6%	$1,248	11.6%
Hartford, CT	$308,417	14.5%	$1,203	31.0%	21.2%	-35.6%	$1,539	10.8%
Richmond, VA	$317,518	13.6%	$1,238	30.0%	15.7%	-23.2%	$1,521	13.4%
New Orleans, LA	$260,769	13.7%	$1,017	30.1%	17.9%	-18.5%	$1,517	18.4%
Buffalo, NY	$235,940	18.1%	$920	35.1%	26.9%	-14.4%	$1,188	10.8%
Raleigh, NC	$433,065	34.9%	$1,689	54.3%	12.4%	-38.6%	$1,687	18.6%
Birmingham, AL	$230,816	17.1%	$900	33.9%	5.6%	-22.3%	$1,273	11.4%
Salt Lake City, UT	$589,622	28.8%	$2,299	47.4%	25.1%	-35.1%	$1,634	20.0%

*Table ordered by market size

**Assuming a 30-year fixed-rate mortgage with a 20% down payment

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease.

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

ⁱ The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Report are aggregated from public sources by a number of data providers for 931 metropolitan and micropolitan areas, dating back to 2000. All current monthly data at the national, state, metro, city, ZIP code and neighborhood levels can be accessed at www.zillow.com/research/data.
ⁱⁱ Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market. Zillow Group Marketplace, Inc. is a licensed mortgage broker, NMLS #1303160.
ⁱⁱⁱ Inventory figures stated in this report are from Zillow's raw for-sale inventory metric, which is more responsive to real-time market shifts. Previous editions of the Zillow Market Report have reported the smoothed for-sale inventory metric, which is a trailing three-month average. Each version of Zillow's for-sale inventory metric is available as a time series at www.zillow.com/research/data/. Please contact [email protected] with any questions.

SOURCE Zillow