Skip to navigation Skip to main content Skip to footer

Residential Products Online content is now on probuilder.com! Same great products coverage, now all in one place!

Image Credit
Image: Artsiom P / stock.adobe.com

Home prices are rising in tandem with interest rates, leaving prospective buyers with few affordable options, even in cooler markets. Over the last five years, the Sun Belt has seen the fastest run-up in home prices, accounting for eight of the top 10 counties analyzed by MarketWatch, with the biggest median home price jumps.

The biggest five-year change took place in Collier, Fla., where the median price of a single-family home rose 89.7% from $445,473 in August 2018 to $845,013 in August 2023.

Over the last year and a half, buyers’ borrowing costs have doubled as the Federal Reserve attempts to quell inflation in the U.S. economy. With the 30-year rate still well over 7%, buyers have found themselves being able to afford less. A buyer who could buy a $500,000 house last August, with a 30-year rate at 5.5%, can only buy a $429,000 house today with a rate of 7.4%, Redfin said.

Higher rates have also unintentionally caused a “lock-in” effect for homeowners. Why would a homeowner who purchased a house financed with a mortgage that came with an interest rate of 3% or 4% sell their home, unless they truly needed to do so? The lack of an incentive to move has kept housing inventory for aspiring homeowners at depressed levels, which in turn has kept home prices up.

Read more

MORE IN CATEGORY