First-Time Buyers Are Really Feeling the Pinch

The 30-year, fixed-rate mortgage surged to 7.37% last week, meaning that the monthly payment for the average U.S. homebuyer has now doubled since before the pandemic, rising from just under $1,200 in the summer of 2019 to $2,430 in July 2023. Higher monthly payments paired with already inflated purchase prices are hurting first-time house hunters more than any other buyer demographic.

Affordable starter homes are becoming practically nonexistent as higher mortgage rates drive up monthly costs and discourage prospective sellers from listing their existing homes, Realtor.com reports.

In Greensboro, NC, previously affordable starter homes have gone from around $81,000 in 2019 to about $182,000, following the pattern of climbing prices and closing the price gap with other nearby and much higher-priced areas like Durham and Raleigh.

The story is similar in Memphis, TN, an iconic Southern city known for its musical roots and low cost of living. The monthly payment on a two-bedroom home there rose by more than 216% since 2019. With an average price of just $56,950 in July 2019, Memphis was one of the most affordable metros in the country, but starter home prices now are around $120,000.

And in Killeen, TX, after starter home prices jumped from $95,175 to $189,500, the monthly cost is up 199%.

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