Home Price Growth Seems Undeterred by Rising Interest Rates

Rising mortgage rates have historically cooled elevated home prices, but as the average interest rate on a 30-year fixed-rate mortgage jumps closer to 5%, record high home prices across the U.S. show no signs of slowing, The New York Times reports. The median monthly payment on a new mortgage application jumped more than 8 percent in February, making homeownership increasingly unaffordable, particularly for first-time buyers.

In the meantime, a major housing deficit is leaving regional markets with too little supply to accommodate rising demand. With the spring buying season just around the corner and an influx of migration caused by remote work on the horizon, the housing market could continue on an unprecedented upward trajectory.

“There are so many strange things going on right now,” said Edward Seiler, the associate vice president for housing economics at the Mortgage Bankers Association.

It has been 40 years since rates have risen like this alongside similar home price growth and high inflation. This time around, the United States also has a severe housing shortage. And then there’s a new and uncertain dynamic — the sudden rise of working from home, which has the potential to change what homebuyers want and where they live.

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