The cost of a 30-year mortgage on the typical home is 19.5 percent higher than it was three months ago, according to the March Zillow Real Estate Market Report. Even so, the pace and volume of sales picked up in March, showing how many buyers are willing to meet current asking prices.
“Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking,” Zillow Senior Economist Jeff Tucker said in a release. “Record-low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices climbed quickly. 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.”
The typical home is worth 20.6 percent more than it was a year ago, the 12th straight month in which a new record for annual home value growth has been set. Mortgage rates, which were 3 percent a year ago, entered March at 3.51 percent and rose as high as 4.54 percent. Rising home values and mortgage rates have pushed the monthly payment on the typical home 38 percent higher than it would have been a year ago, assuming a 30-year mortgage with a 20 percent down payment, according to Zillow.
One bright spot for home shoppers is that March brought a seasonal inventory boost. After six consecutive months of dwindling inventory, 11.6 percent more homes were available in March than in February, the largest one-month jump in Zillow’s records.
However, inventory is 22.5 percent lower than it was a year ago, and the 754,000 homes that were on the market in March represented a figure lower than in any month on record before January 2022. The number of newly listed homes in March jumped 35.8 percent from February to about 386,000, but that’s 8.5 percent lower than a year ago.
Zillow’s home value forecast now calls for 14.9 percent growth through March 2023, down from the 16.5 percent growth rate forecast in February. Zillow’s existing home sales forecast has been lowered as well, to 6.09 million sales in 2022, a .5 percent dip from 2021.