Monthly mortgage payments are up 34% year-over-year, and those who can no longer afford home purchases are flooding an already inundated rental market, Redfin reports. The median monthly asking rent in the U.S. increased 17% year-over-year in March to a new record high of $1,940, but monthly payments for homes are rising twice as quickly. The national median monthly mortgage payment for homebuyers saw a 34% year-over-year gain to a record high of $1,910 in March, and those who can’t afford to buy are now choosing to rent.
Year-over-year rents rose 40% in Portland, while Austin, Texas saw a similar increase of 38% and many Florida metros also reported gains of 30% or more.
The increase in monthly mortgage payments is largely because mortgage rates climbed from under 3% to 5% in just the past three months, pushing many potential buyers out of the for-sale market and increasing demand—and prices—for rentals. Even though homebuyer monthly payments are rising rapidly, asking rents were still slightly higher as of March—but the gap is closing quickly and is the smallest on record in Redfin’s rental data.
Although the home purchase market is showing early signs of a cooldown and price growth may slow in the coming months, Redfin economists do not currently expect sale prices or mortgage rates to drop.
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