How much you'd pay per month for a typical home in 6 US cities where prices have fallen but mortgage rates are on the rise
Alcynna Lloyd
- Mortgage-rate hikes are throwing cold water on homebuyer activity.
- Less demand has led to home-price declines in several markets across the country.
A short walk around your neighborhood could tell you that the housing market is going through something.
Whether you live in the quiet suburbs of Seattle or the busy streets of downtown Nashville, you're probably seeing fewer "for sale" signs in front yards and smaller asking prices.
It's part of the housing market's cooldown.
Gone are the days of intense buyer competition. America's new housing ecosystem has a limited number of home listings, fewer buyers, and, ultimately, lower home prices.
But that doesn't mean homeownership has become any more affordable.
For many Americans, housing is more expensive than ever before. New homeowners are suffering from a double whammy of high inflation and rising interest rates. That's led to mortgage-rate hikes that have offset affordability gains obtained through slowing price appreciation.
Freddie Mac indicates that the average rate on a 30-year fixed-rate mortgage is at its highest since April 2002. In most cases, homebuyers are facing rates that have nearly doubled since 2021.
"For the typical mortgage amount, a borrower who locked in at the higher end of the range would pay several hundred dollars more than a borrower who locked in at the lower end of the range," Sam Khater, the chief economist at Freddie Mac, told Insider.
To get a sense of how rates are affecting affordability, Insider examined six homebuying hot spots where prices have been falling, then used home-price data sent to us from Zillow to determine each market's peak home value during the latest boom as well as its typical home value today.
Using mortgage rate data from Freddie Mac, we then calculated how much the monthly payment would be for a homebuyer if they had locked in a mortgage at their market's peak — when rates were much lower than they are today — and how much they'd pay if they were to lock in at current rates.
In today's rate environment, assuming a homebuyer makes a 20% down payment and chooses a 30-year fixed-rate mortgage, a slashed listing price doesn't always mean a home has become more affordable.
This was the case for Austin, Texas, where if a buyer had purchased a home worth $602,894 in May — when prices reached a peak in the city — and got a mortgage rate of 5.09%, their monthly payment would be about $2,616.
But if they bought a home now, when the typical home value is $553,280, and locked in a rate of 6.94%, their monthly payment would jump to nearly $2,927.
Read on to see how mortgage rates are affecting housing affordability in other parts of the country.
Phoenix, Arizona
Over the past few years, Phoenix has been one of the nation's most competitive real-estate markets — but that's starting to change. As housing costs and higher mortgage rates weaken buyer demand, home sales have fallen in the city.
Zillow indicates the city's typical home value is $451,313.
Prices at market peakHome peak price: $483,206
Mortgage rate: 5.09%
Monthly mortgage payment: $2,096
Price todayHome-price decline from peak: 6.6%
Typical home price: $451,313
Mortgage rate: 6.94%
Monthly mortgage payment: $2,388
Seattle, Washington
Zillow indicates Seattle's typical home value is $757,495. Though that's high, home prices have been falling in the city as demand has slowed. In a September report, the real-estate brokerage Redfin described the city as the fastest-cooling market in the country.
Prices at market peakHome peak price: $808,395
Mortgage rate: 5.27%
Monthly mortgage payment: $3,579
Prices todayHome-price decline from peak: 6.3%
Typical home price: $757,495
Mortgage rate: 6.94%
Monthly mortgage payment: $4,007
Sacramento, California
Sacramento's competitive housing market appears to be losing its edge. Redfin analysts said in July that they thought the city was at a high risk of a housing downturn if the US entered a recession.
Zillow said that as of October, Sacramento's home prices had fallen by 5.6% from their peak, pulling the typical home value down to $591,512.
Prices at market peakHome peak price: $626,548
Mortgage rate: 5.09%
Monthly mortgage payment: $2,718
Prices todayHome-price decline from peak: 5.6%
Typical home price: $591,512
Mortgage rate: 6.94%
Monthly mortgage payment: $3,129
Nashville, Tennessee
For years Nashville's strong job market, lively entertainment, and relatively affordable housing market made it a popular homebuying destination. But as rising interest rates weigh on the real-estate market, homebuyer activity has been cooling.
According to Zillow, Nashville's median home price is $455,477. While that's 25.4% higher than in 2021, price growth is likely to slow as the city's home sales shrink.
Prices at market peakHome peak price: $460,400
Mortgage rate: 4.99%
Monthly mortgage payment: $1,975
Prices todayHome-price decline from peak: 1.1%
Typical home price: $455,477
Mortgage rate: 6.94%
Monthly mortgage payment: $2,410
Austin, Texas
Competition for residential real estate in Austin has been falling as more homes sit on the market. The additional supply has helped alleviate some competition. The CoreLogic S&P Case-Shiller Index indicates home prices in the city climbed by 18% year over year in June, falling from May's 19.9% annual increase. The typical home value in Austin is now $553,280, according to Zillow.
Prices at market peakHome peak price: $602,894
Mortgage 5.09%
Monthly mortgage payment: $2,616
Prices todayHome-price decline from peak: 8.2%
Typical home price: $553,280
Interest rate: 6.94%
Monthly mortgage payment: $2,927
Denver, Colorado
Denver's strong economy has long been a motivator for many people moving there. As Denver's popularity grew during the pandemic, its housing market boomed — but as is the case for many other US cities, it's been losing steam. A report from the Denver Metro Association of Realtors found that home prices fell for the second consecutive month in August.
According to Zillow, the typical home value in the city is $622,434.
Prices at market peakHome peak price: $650,100
Mortgage rate: 5.09%
Monthly mortgage payment: $2,821
Prices todayHome-price decline from peak: 4.3%
Typical home price: $622,434
Mortgage rate: 6.94%
Monthly mortgage payment: $3,923
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