Higher mortgage rates and elevated home prices have sharply raised the cost of buying a home: the typical U.S. mortgage holder would need about $1,100 more each month than they currently pay in principal and interest to buy a median-priced home at a 7.32% rate, according to a new Realtor.com^® report. The estimated payment would climb from $1,332 to $2,468, an 85.3% increase that translates to a 15.6 percentage-point rise in the share of income the typical U.S. household spends on housing. (For local data see full table below)

The typical outstanding mortgage carries a rate of about 4.0%, well below the 7.32% rate used to estimate the cost of buying today. Buyers today face a substantial affordability hurdle due to both rising home prices and mortgage rates since many existing loans originated. In roughly one-third of the 100 largest metros, buying a median-priced home would more than double the typical mortgage holder's current monthly principal-and-interest payment.

"Home sales have been stuck for several years, and this research helps illuminate one of the major friction points for today's homeowners who might like to move.  Together, home prices and mortgage rates have drastically changed what it takes to buy a home," said Danielle Hale, chief economist at Realtor.com^®. "For the typical mortgage holder, buying a home at today's median-price and current rates would mean finding about $1,100 more each month for principal and interest, before property taxes and insurance. Lower rates would help, but even at 6%, the typical payment would still be more than 60% higher. For many families, that is money they simply don't have to spare."

The size of that payment increase varies dramatically across the country. Portland, Maine, San Jose and Los Angeles have the steepest percentage increases, while Pittsburgh, Baltimore and Buffalo have the smallest.

High-Priced Metros with Lower Outstanding Mortgage Rates are Most Locked-in

Portland, Maine, leads the country in the percentage increase current mortgage holders would face to buy a median-priced home. The estimated monthly principal-and-interest payment would rise from $1,270 to $3,392, a 167.0% increase. That puts Portland ahead of even some of California's most expensive markets in the size of the jump relative to what existing mortgage holders pay.

In San Jose, the estimated payment to buy reaches $7,039 a month, compared with $2,659 for the typical current mortgage holder—a 164.8% increase. That new payment assumes a typical down payment of 26.2%, underscoring how high home prices keep financing costs elevated even when buyers put down a substantial share of the purchase price. In Los Angeles, the estimated payment rises from $2,149 to $5,628, an increase of 161.9%.

Oxnard, Calif., and Albany, N.Y., round out the five markets with the largest percentage increases. In each, the estimated payment to buy is more than 140% higher than what the typical current mortgage holder pays.

In expensive markets, larger mortgage balances amplify the impact of higher borrowing costs. A homeowner moving from an older, lower-rate loan to a new mortgage can face a steep payment increase, making it harder to move within the same market. Those higher purchase payments also raise the hurdle for first-time buyers. 

Most Locked-in Housing Markets

Low-priced, Accessible Markets See Smallest Lock-in Effect

Pittsburgh has the smallest payment increase among the 100 largest metros, but buying still requires a meaningful step up in monthly spending. The estimated principal-and-interest payment on a median-priced home is $1,441, compared with $1,005 for the typical current mortgage holder—a 43.3% increase. Baltimore follows at 45.0%, and Buffalo at 46.1%.

Lower housing costs help these markets keep the payment gap smaller. Many more affordable metros also entered the current cycle with higher outstanding mortgage rates, reflecting a less intense pandemic buying boom, fewer refinances or steadier sales activity in the higher-rate environment. With less distance between an existing mortgage rate and a new one, homeowners face a smaller financial penalty for moving.

"More affordable markets offer homeowners a smaller payment jump, not an escape from higher costs," said Hannah Jones, senior economist at Realtor.com^®. "The estimated increase is about 43% in Pittsburgh versus 165% in San Jose. Lower home prices and, in many markets, higher rates on existing loans help narrow that gap, making a move more attainable."

San Antonio shows how falling home prices can also reduce the hurdle. Its median listing price was $320,374 in September, down 2.9% from a year earlier and 16.2% below its mid-2022 peak. Prices have declined year over year for more than three years, helping keep the payment increase among the country's smallest. The estimated payment to buy is $2,053, or 60.8% above the typical current mortgage-holder payment of $1,277.
 

Least Locked-in Housing Markets

How Low Do Mortgage Rates Need to Go to Unlock the Market?

Lower rates would improve buying power, but a meaningful payment gap would remain. At the September median listing price of $419,250 and a 14.3% down payment, each half-percentage-point decline in the mortgage rate lowers the estimated monthly payment by roughly $110 to $120 and trims the gap with current mortgage holders' payments by about 8 to 9 percentage points.

At the modeled 7.32% rate, 44.5% of U.S. households could afford the median-priced home. A decline to 6.5% would raise that share to 48.0%. Rates would need to fall to about 6.0% for just over half of households—50.2%—to afford that home. Even then, the estimated monthly payment would be $2,154, still 61.7% higher than the typical current mortgage-holder payment.

A decline to 5.0% would bring the estimated payment to $1,929 and put the median-priced home within reach of 54.8% of households. Even a return to the roughly 4.0% rate on the typical outstanding mortgage would leave the payment about 29% higher than what the typical current mortgage holder pays, because home prices have risen since many existing loans originated.

"Lower rates alone would not erase the affordability gap," said Jones. "Slower home-price growth and rising incomes would also help narrow the difference between what households pay now and what it would take to buy."