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From early 2022 to late October, the U.S. weekly 30-year fixed-rate mortgage rose just above 3% to over 7% before leveling off at 6.42% at the end of the year. That sharp increase sent monthly mortgage payments from $1,925 on a median priced new home in early 2022 to $2,923 on the same house by the close of the year, a 51% increase, according to NAHB Eye on Housing.

As a result, only 20.3% of U.S. households could afford a median priced new home at October’s 7.08% rate, a share that will fall even further if more rate hikes are introduced in the year ahead.

When interest rates increased from 3.22% to 4.22% as of the middle of March 2022, the percent of households that can afford median-priced new homes decreased to 30.4% from 34.2%. The monthly mortgage payment, which includes principal and interest, but excludes taxes and insurance, for the same home increased from $2,165 from $1,925.

An increase from 4.22% to 5.22% as of early May 2022 priced additional 5 million households out of the market for the median-priced new homes.

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