US Housing Payments Hit Record High

American homeowners' monthly mortgage payments reached an all-time high of $2,807 in the four weeks ending March 23, up 5.3 percent from a year earlier, according to a new study by Redfin.

It is bad news for those who were hoping that recent declines in mortgage rates would bring in much-needed affordability to the largely frozen U.S. housing market.

Why It Matters

Mortgage rates, which had remained relatively low during the pandemic, skyrocketed in 2022 as a result of the Federal Reserve's aggressive rate-hiking campaign to combat inflation. Between 2020 and 2024, the typical monthly mortgage payment climbed from $1,100 to $2,207, according to Bankrate.

While the central bank has since lowered its key rates and is likely to implement two more cuts this year, mortgage rates are expected to remain between 6 percent and 7 percent throughout 2025 and 2026, exacerbating the U.S. ongoing affordability crunch.

What To Know

As of March 27, the latest data made available by the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, the 30-year fixed-rate mortgage was 6.65 percent, down 0.02 percentage point from a week earlier and 0.14 from a year earlier. It is near the lowest Americans have seen since December.

While mortgage rates have been coming down in recent weeks, they are still more than double what they used to be during the pandemic. Home prices have also continued rising as the country still faces a historic lack of inventory: in the four weeks ending March 3, the median sale price of a typical U.S. home was $383,750, up 3 percent from a year earlier, according to Redfin.

The median asking price was $424,985, up 6.3 percent year-over-year.

The high cost of housing is "putting a lid" on home sales, researchers at the real estate brokerage said. Pending home sales were down 4.6 percent year-over-year last month, following a downward trend in the last few months as affordability issues dampen demand.

While buyers hesitate, sellers seem tired of waiting for better times. New listings of homes for sale were up 7.5 percent year-over-year in February, the biggest increase so far this year.

A combination of new listings and declining mortgage rates could spell good news for buyers, even as home prices and monthly payments remain higher than they would wish for.

What People Are Saying

Greg McBride, chief financial analyst for Bankrate, said in a statement: "Today's homebuyer is financing $100,000 more than the buyer five years ago and doing so at a rate of 7 percent instead of 3 percent.

"In the absence of continually lower mortgage rates, home prices cannot rise faster than homebuyer incomes in perpetuity. After the outsized home price appreciation exiting the pandemic, most markets are likely looking at a very tepid pace of home price appreciation in the next few years as incomes, and the buying power of households, closes some of that gap."

Kimberly Freutel, a Redfin Premier agent in Sammamish, Washington, said in a statement: "Buyers are cautious because they're worried about the economy and potential layoffs, and they're wondering if mortgage rates will come down later this year. But because other buyers are cautious too, some house hunters are getting homes for under asking price.

"If you love a home and you see yourself living there for at least four or five years, make an offer you're comfortable with, even if it's a little below list. Don't assume it will escalate out of your price range, because the seller might actually take it. I'm asking my clients, 'Would you be sad if this home ends up selling for less than asking price to someone else?'"

What Happens Next

Even with home prices still climbing and mortgage rates remaining historically high, buyers are perking up for spring buying season—usually the busiest time of the year.

While experts told Newsweekthat this is "the best time to be a buyer" in years, rising housing costs—including homeowner insurance premiums, property taxes, and homeowner association (HOA) fees—are still squeezing many aspiring buyers on the sidelines of the market.