Monthly mortgage payments are up by 19.5% from three months ago, and 38% YOY, according to Zillow’s March Real Estate Market Report.
Annual home value growth set a new record for the 12th consecutive month. The typical home is now worth $337,560, up 20.6% YOY.
At the same time, mortgage rates have grown from 3.51% at the beginning of March to breach the 5% mark at the end of the month. The combo has pushed monthly payments up 38% YOY on a home with a 30-year mortgage and 20% down payment.
Despite this, Zillow reports that the pace and volume of sales picked up, “showing the depth of the pool of homebuyers willing and able to meet current asking prices.”
“Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking. Record low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices climbed quickly,” said Jeff Tucker, Zillow senior economist.
“March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace, and the answer was ‘So far, yes.’ There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth, but for now, there is plenty of fuel in the tank as home shopping season kicks into gear.”
Zillow notes that 11.6% more homes were available in March than in February, the largest one-month jump in Zillow’s records and a “bright spot” for would-be homebuyers struggling to compete in the hot housing market.
However, inventory remains 22.5% below March 2021’s numbers, and demand is still beating out supply. Pending home sales matched new inventory exactly at 11.6%.
Zillow now predicts 14.9% growth through March 2023, down from its original forecast of 16.5%. The company’s prediction for existing home sales also dropped to 6.09 million sales in 2022, which would be down 0.5% from 2021.