Americans are finding it hard to afford homes at mortgage levels now beyond 7%, according to some measures. Home prices have begun to reflect that.
As mortgage rates rose in the last quarter of 2022, Americans found the cost of homeownership increasingly challenging, adding hundreds of dollars in interest to their potential monthly mortgage payment. Yet home prices held steady, given how few homes were on the market.“The U.S. housing market is crumbling under the weight of higher mortgage rates and rock-bottom affordability,” Matthew Walsh, Moody’s Analytics housing economist, said.
But looking at prices year-over-year, the West Coast is leading the drop, Moody’s Analytics said, with California, Nevada and Washington reporting values below what they saw in 2022. “That hampered demand because it meant that many of the buyers who were still in the market had a tough time finding a home that met their needs. The shortage of homes for sale also buoyed home prices,” he added.