ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / MONEY 101

Here's How Interest Rates are Going to Impact Homeownership Costs in the US

Delve Into the Details of Expenses Related to Upgrading Your Dream Home and Its Impact on Housing Accessibility
PUBLISHED APR 6, 2024
Cover Image Source: Unsplash|Photo by  Frames For Your Heart
Cover Image Source: Unsplash|Photo by Frames For Your Heart

Despite rising interest rates, demand for housing in the US has remained high and this has led to a further surge in home prices. This is surprising since the demand for new units goes down when interest rates go up, and the trend isn't helping at a time when affordable housing is out of reach.



 

In February the prices for the houses were almost 5% higher compared to the prices around the same time last year. The interest rate in February was around 7% which was 1% lower than the interest rates in October last year, when it touched an all-time high of 8%. Home buyers are more interested in newly built homes as it is evident that 6% more newly built homes were sold this year in February as compared to February of 2023. On the other hand, the sales of existing homes have been down by 7% as compared to last year's February.

The supply of houses in February is more than the last sprint but still, the number of houses available is just 60% of the availability in the pre-pandemic era. Rising prices are a major factor preventing people from vacating their current houses in favor of better accommodation. In 2022, if someone wanted to move to a new house that would cost 25% more than the price of the existing house, the monthly payment would increase by merely $400. But in 2024, if someone wants to make a similar move, they would have to shell out $1800 more than their existing payments. Even if someone wants to shift to a house with the same price tag, their monthly payments would increase by 60%.



 

There are plenty of factors that affect the supply and demand dynamics of the housing market and can make the market favorable for new house buyers. This includes lowering interest rates to make payments easier. If the financial institutions lower the interest rate on home loans to 6%, then shifting to a house that is 25% costlier than the existing one would cost 88% more, while the same move would be 132% more expensive at a 7% rate. Existing property owners picked up loans at rates that were significantly lower. Around 88.5% of the people who purchased houses on mortgage earlier, got it at interest rates below 6%. Some of them were even fortunate enough to secure properties at an interest rate of 3% or 4%.



 

The prices for houses in the United States are rising at a quick pace, and this makes it challenging for home buyers to purchase a new property. In some states such as California, buyers are discouraged from even thinking about making a move. Apart from that, there are more than 550 cities in the United States where the cost of buying a house is more than $1 million. These high prices combined with high interest rates have led to a decrease in demand.

MORE ON MARKET REALIST
Bill Morgan, a trucker from Australia, achieved the miraculous feat back in 1999.
1 hour ago
Jared took his bill to one of the most famous pawn shops where they told him it was worth a small fortune.
5 days ago
She went to a CVS store in Blacksburg to purchase a Mega Millions ticket for the upcoming big jackpot of $893 million on March 18, 2024.
Sep 28, 2024
Depositing a check twice is illegal, but it's an easy mistake to make, especially with the advent of remote deposits through a bank’s mobile app.
Sep 27, 2024
Can I use a family member's Costco card? A Costco membership comes with restrictions, so be sure to know the rules. We'll break the rules down.
Sep 26, 2024
Heritage Auctions called the piece "birth certificate of America's last silver dollar". 
Sep 25, 2024
Ruth L Gottesman got $1 billion in Berkshire Hathaway stock upon her husband's passing.
Sep 25, 2024
Before we get into this list, think of anything that you might use only once or twice.
Sep 24, 2024
Shaq says the strategy isn't about making money but it did pay off monetary dividends as well.
Sep 23, 2024
What are some of the most valuable action figures? You can make good money selling vintage Barbies, G.I. Joes, and Star Wars action figures.
Sep 20, 2024
Pokémon cards were all the rage in the '90s and early 2000s. Are they worth anything today? You might be surprised.
Sep 19, 2024
The boxes of popular, rare, and vintage LEGO sets may be valuable. Before you throw them away, find out if the LEGO boxes are worth anything.
Sep 18, 2024
People collect all sorts of things, and if you have old National Geographic Magazines lying around, you may wonder if they're worth anything.
Sep 17, 2024
What are some things you didn't know you could pawn? You can make good money selling or pawning vintage items or other items in good condition.
Sep 17, 2024
Back in 2017, a woman spotted an envelope lying at a Walmart store with an important message.
Sep 14, 2024
If you have a box of Disney VHS tapes in around your house, it's time to pull them out because they could be worth thousands — especially certain movies.
Sep 13, 2024
Psychologist, Andrew T. Jebb, and his team analyzed the data provided by the Gallup World Poll from 164 countries, to arrive at this conclusion. 
Sep 12, 2024
The man who sold the collector's item to pay the bills was left in tears after getting it back.
Sep 11, 2024
The strategy has allowed the company to save millions of gallons of fuel, and time.
Sep 10, 2024
When he checked his PayPal account, there was $92,233,720,368,547,800 in it.
Sep 9, 2024