Demand wavers in some areas as housing costs
mount
- Mortgage payments are higher than rent in 45 of the 50 largest
U.S. metros, up from 22 in 2019.
- Price appreciation is finally starting to slow, easing slightly
from 20.9% annual growth in April to 20.7% in May.
- Inventory continues to recover from February lows, but is still
50% below 2019 levels.
SEATTLE, June 21,
2022 /PRNewswire/ -- Ballooning mortgage costs,
driven by skyrocketing prices and interest rates, have made
mortgages less affordable than at any time since at least 2007.
Demand for homes has pulled back in response, easing price growth,
slowing sales and boosting inventory, according to the latest
market report1 from Zillow®.
Mortgage rates have shot up in early June, averaging
5.78%2 as of Thursday. A new purchase of a typical U.S.
home3 at that rate would mean monthly mortgage payments
of $2,127, that's 51% higher than a
year ago and up 36% year to date.
"Mortgage rates took an unprecedented leap skyward over the past
two weeks and quickly multiplied housing costs as they rose," said
Zillow economist Nicole Bachaud. "We
are already seeing signs of waning demand, and expect these recent
rate hikes to quicken the market's needed rebalancing. While
shoppers will likely experience less competition for homes than the
frenzied recent months, their purchasing power has
dwindled."
Incomes are lagging further behind fast-rising mortgage costs,
leading to the most significant affordability challenges in the
past 15 years. The latest data available from April shows monthly
payments4 taking about 28% of homeowners' monthly income
— dangerously close to the 30% threshold, beyond which is
considered a cost burden. With rates now far above April's average,
that share is at or very near 30% already. Zillow data for this
metric is available through 2007; the Atlanta Federal Reserve's
Home Ownership Affordability Monitor shows affordability
bottoming out in July 2006.
Although rents have soared since the start of 2021, the rapidly
rising cost of a mortgage still makes rent the cheaper option
nearly everywhere. A typical rent payment in May is more expensive
than a mortgage payment (with a 20% down payment), including taxes
and insurance, in just five of the 50 largest U.S. metros. In
May 2019, rent was more expensive in
28 of those metros.
After annual price appreciation set new record highs for 13
straight months, home values finally turned the corner in May to
show a slightly slower pace of annual growth: 20.7%, down from
20.9% in April.
"Arriving in the middle of the spring selling season, this
deceleration is a clear signal that buyers are dialing back their
demand for homes in the face of daunting affordability challenges,"
said Jeff Tucker, senior economist
at Zillow.
The trend appears to show that the market passed an inflection
point for home values between April and May, transitioning
from ever hotter to somewhat cooler price growth. The typical U.S.
home is now worth $349,816 — nearly
$60,000 more than last year and
almost $95,000 higher than in May
2020.
Sales are also slowing. The number of for-sale listings that
went under contract in May is down nearly 20% from 2021, when that
activity was near a four-year peak, and is 2% below that of
May 2019. The median time on market
for new listings is just seven days — holding steady from April and
even with last May.
Share of listings with a price cut is ticking up as well —
rising to 11.5% in May from a recent low of 8.5% in
February.
Inventory of for-sale listings continued its steady spring climb
and now sits just 14.2% below its year-ago level. Still, that
leaves buyers with 50% fewer options than they had to choose from
in May 2019.
Typical rents are up to $1,979 in
the U.S. and still rising fast, with 1.2% monthly growth that
slightly edged April's 1.1% month-over month rise. To put this into
context, the average monthly May rent growth from 2014 to 2019 was
0.7%. Annual rent appreciation for May is 15.9%, easing off a peak
of 17.2% in February.
Metropolitan
Area*
|
Zillow
Home
Value
Index
(ZHVI)
|
ZHVI
Year-
Over-
Year
(YoY)
Change
|
Monthly
Mortgage
Payment
on a
Typical
Home**
|
Monthly
Mortgage
Payment
on a
Typical
Home
YoY
Change
|
Newly
Pending
Transactions
YoY
Change
|
Zillow
Observed
Rent
Index
(ZORI)
|
ZORI
YoY
Change
|
Share
of
listings
with
a
Price
Cut
|
United
States
|
$349,816
|
20.7 %
|
$2,031
|
47.3 %
|
-19.6 %
|
$1,979
|
15.9 %
|
11.5 %
|
New York, NY
|
$609,114
|
13.0 %
|
$3,595
|
37.5 %
|
-23.6 %
|
$3,121
|
20.8 %
|
9.1 %
|
Los Angeles,
CA
|
$948,029
|
20.6 %
|
$4,870
|
51.6 %
|
-23.9 %
|
$2,922
|
16.1 %
|
9.6 %
|
Chicago, IL
|
$309,940
|
14.6 %
|
$1,983
|
37.1 %
|
-20.1 %
|
$1,945
|
11.0 %
|
13.6 %
|
Dallas–Fort
Worth, TX
|
$390,505
|
30.3 %
|
$2,549
|
55.3 %
|
-5.7 %
|
$1,791
|
17.7 %
|
10.2 %
|
Philadelphia,
PA
|
$332,772
|
13.5 %
|
$2,026
|
37.2 %
|
-20.6 %
|
$1,846
|
11.2 %
|
12.8 %
|
Houston, TX
|
$306,192
|
23.2 %
|
$2,032
|
46.4 %
|
-21.1 %
|
$1,575
|
11.7 %
|
13.4 %
|
Washington,
DC
|
$554,922
|
10.2 %
|
$2,980
|
37.1 %
|
-21.9 %
|
$2,231
|
11.6 %
|
11.0 %
|
Miami–Fort
Lauderdale, FL
|
$445,739
|
30.0 %
|
$2,651
|
57.9 %
|
-32.7 %
|
$2,862
|
31.0 %
|
9.3 %
|
Atlanta, GA
|
$375,674
|
30.5 %
|
$2,111
|
60.5 %
|
-26.3 %
|
$1,938
|
16.7 %
|
12.4 %
|
Boston, MA
|
$659,089
|
15.0 %
|
$3,709
|
41.4 %
|
-25.8 %
|
$2,788
|
12.1 %
|
8.0 %
|
San
Francisco,CA
|
$1,500,189
|
18.5 %
|
$7,702
|
49.0 %
|
-16.5 %
|
$3,214
|
10.3 %
|
8.3 %
|
Detroit, MI
|
$241,645
|
15.0 %
|
$1,491
|
38.6 %
|
-14.5 %
|
$1,423
|
11.3 %
|
11.7 %
|
Riverside,
CA
|
$585,904
|
26.0 %
|
$3,202
|
56.0 %
|
-16.5 %
|
$2,613
|
15.9 %
|
12.6 %
|
Phoenix, AZ
|
$476,098
|
29.0 %
|
$2,487
|
61.6 %
|
-12.2 %
|
$1,937
|
19.1 %
|
13.3 %
|
Seattle, WA
|
$794,576
|
24.8 %
|
$4,269
|
55.2 %
|
-8.4 %
|
$2,265
|
15.5 %
|
10.0 %
|
Minneapolis
–St. Paul, MN
|
$377,615
|
12.3 %
|
$2,203
|
37.0 %
|
-18.8 %
|
$1,657
|
6.5 %
|
10.3 %
|
San Diego,
CA
|
$936,472
|
26.2 %
|
$4,857
|
58.2 %
|
-18.0 %
|
$2,999
|
19.7 %
|
10.6 %
|
St. Louis,
MO
|
$242,392
|
14.7 %
|
$1,468
|
38.7 %
|
-18.2 %
|
$1,281
|
11.3 %
|
9.5 %
|
Tampa, FL
|
$375,460
|
36.5 %
|
$2,233
|
65.8 %
|
-18.5 %
|
$2,089
|
25.2 %
|
12.9 %
|
Baltimore,
MD
|
$374,947
|
11.1 %
|
$2,078
|
37.1 %
|
-18.0 %
|
$1,808
|
9.8 %
|
11.9 %
|
Denver, CO
|
$646,964
|
23.6 %
|
$3,394
|
54.5 %
|
-8.3 %
|
$1,988
|
14.2 %
|
11.2 %
|
Pittsburgh,
PA
|
$212,781
|
11.8 %
|
$1,313
|
34.8 %
|
-16.8 %
|
$1,361
|
8.4 %
|
13.8 %
|
Portland, OR
|
$588,606
|
18.7 %
|
$3,222
|
46.8 %
|
-19.5 %
|
$1,873
|
12.5 %
|
12.6 %
|
Charlotte,
NC
|
$380,090
|
31.1 %
|
$2,090
|
62.1 %
|
-25.5 %
|
$1,779
|
17.7 %
|
12.1 %
|
Sacramento,
CA
|
$623,735
|
21.0 %
|
$3,341
|
50.6 %
|
-14.2 %
|
$2,281
|
10.1 %
|
14.9 %
|
San Antonio,
TX
|
$335,423
|
25.4 %
|
$2,145
|
50.1 %
|
-25.0 %
|
$1,469
|
14.9 %
|
12.3 %
|
Orlando, FL
|
$386,180
|
33.4 %
|
$2,238
|
62.9 %
|
-20.5 %
|
$2,040
|
23.7 %
|
10.6 %
|
Cincinnati,
OH
|
$259,655
|
16.0 %
|
$1,567
|
40.4 %
|
-16.6 %
|
$1,455
|
11.9 %
|
10.4 %
|
Cleveland,
OH
|
$216,396
|
15.1 %
|
$1,390
|
37.7 %
|
-14.3 %
|
$1,370
|
11.0 %
|
10.3 %
|
Kansas City,
MO
|
$285,599
|
15.6 %
|
$1,723
|
40.0 %
|
-18.8 %
|
$1,347
|
11.0 %
|
8.4 %
|
Las Vegas,
NV
|
$446,534
|
32.4 %
|
$2,354
|
65.3 %
|
-16.7 %
|
$1,847
|
18.8 %
|
13.7 %
|
Columbus, OH
|
$295,211
|
16.7 %
|
$1,852
|
40.3 %
|
-13.8 %
|
$1,440
|
12.3 %
|
9.1 %
|
Indianapolis,
IN
|
$266,890
|
20.3 %
|
$1,520
|
47.6 %
|
-11.5 %
|
$1,501
|
13.2 %
|
10.8 %
|
San Jose, CA
|
$1,706,565
|
22.4 %
|
$8,664
|
54.4 %
|
-20.8 %
|
$3,295
|
12.1 %
|
8.1 %
|
Austin, TX
|
$599,525
|
32.4 %
|
$3,724
|
59.4 %
|
-28.9 %
|
$1,869
|
18.7 %
|
9.6 %
|
Virginia
Beach, VA
|
$321,842
|
14.1 %
|
$1,774
|
41.0 %
|
-2.9 %
|
$1,607
|
11.0 %
|
7.7 %
|
Nashville,
TN
|
$442,418
|
33.1 %
|
$2,400
|
65.2 %
|
-30.2 %
|
$1,840
|
18.4 %
|
12.5 %
|
Providence,
RI
|
$444,314
|
16.3 %
|
$2,637
|
41.3 %
|
-27.3 %
|
$1,946
|
15.3 %
|
8.3 %
|
Milwaukee,
WI
|
$271,326
|
11.8 %
|
$1,695
|
34.4 %
|
-19.6 %
|
$1,186
|
7.5 %
|
8.3 %
|
Jacksonville,
FL
|
$363,998
|
33.1 %
|
$2,099
|
62.8 %
|
-25.7 %
|
$1,778
|
19.2 %
|
12.4 %
|
Memphis, TN
|
$228,061
|
20.6 %
|
$1,375
|
46.1 %
|
4.8 %
|
$1,536
|
12.6 %
|
9.5 %
|
Oklahoma
City, OK
|
$213,799
|
18.3 %
|
$1,308
|
42.8 %
|
-20.1 %
|
$1,335
|
11.9 %
|
10.6 %
|
Louisville,
KY
|
$238,698
|
13.8 %
|
$1,356
|
39.6 %
|
-18.6 %
|
$1,279
|
11.4 %
|
13.0 %
|
Hartford, CT
|
$318,367
|
14.4 %
|
$2,055
|
36.7 %
|
-31.2 %
|
$1,628
|
11.1 %
|
8.3 %
|
Richmond, VA
|
$326,990
|
13.2 %
|
$1,759
|
40.7 %
|
-22.2 %
|
$1,591
|
12.8 %
|
6.8 %
|
New
Orleans, LA
|
$266,858
|
14.3 %
|
$1,552
|
39.5 %
|
-16.0 %
|
$1,522
|
16.0 %
|
16.0 %
|
Buffalo, NY
|
$246,213
|
17.7 %
|
$1,657
|
39.5 %
|
-10.4 %
|
$1,260
|
10.0 %
|
8.2 %
|
Raleigh, NC
|
$456,241
|
37.3 %
|
$2,494
|
69.9 %
|
-28.0 %
|
$1,742
|
16.9 %
|
9.3 %
|
Birmingham,
AL
|
$237,845
|
17.8 %
|
$1,271
|
46.6 %
|
6.0 %
|
$1,343
|
11.0 %
|
10.8 %
|
Salt Lake
City, UT
|
$612,118
|
27.4 %
|
$3,183
|
59.7 %
|
-38.4 %
|
$1,712
|
17.3 %
|
15.5 %
|
|
*Table ordered by
market size
|
**Includes
principal, interest, taxes and insurance, assuming a 30-year
fixed-rate mortgage with a 20% down payment and 5.23% interest rate
on a home priced at the Zillow Home Value Index, or typical home
value, for that area in May.
|
|
1 The Zillow Real Estate Market Report is
a monthly overview of the national and local real estate markets.
The reports are compiled by Zillow Research. For more information,
visit www.zillow.com/research.
2 Based on data from Freddie Mac
3 Assuming a new loan on a house priced at Zillow's Home
Value Index in May of $349,816, using
a 20% down payment and a 30-year fixed-rate mortgage at 5.78%,
includes taxes and insurance.
4 Assuming a new loan on a house priced at Zillow's Home
Value Index in April of $344,773,
using a 20% down payment and a 30-year fixed-rate mortgage at
4.98%, includes taxes and insurance
About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate
to make it easier to unlock life's next chapter. As the most
visited real estate website in the United
States, Zillow® and its affiliates offer customers an
on-demand experience for selling, buying, renting or financing with
transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®,,
Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing
Services™, Trulia®, Out East®, ShowingTime®, Bridge Interactive®,
dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an
Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
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SOURCE Zillow