Pace, Volume Of Home Sales Keep Up Despite High Costs, 20% Rise In Mortgage Rates

By Editor, Times of San Diego

April 22, 2022

Quickly rising mortgage rates are compounding affordability challenges brought on by record home value growth, but that’s not stopping determined home buyers.

The cost of a 30-year mortgage on the typical U.S. home is now nearly 20% higher than it was just three months ago, according to Zillow.com’s March Real Estate Market Report. Despite this, the pace and volume of sales picked up last month, showing that there are buyers willing and able to meet current asking prices.

In San Diego for March:

• The typical home is worth $902,655, up 27.8% year over year.
• The monthly payment on such a home is now $3,520, assuming a 30-year mortgage with a 20% down payment. That’s 22.9% higher than the start of the year, and 46.2% higher than a year ago.
• Inventory grew 17.9% from February, yet remains 19% lower than a year ago.
• Newly pending sales are up 17.8% from February, but still down 14.6% from last year.

Nationally, the typical U.S. home is worth 20.6% 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 below 3% a year ago, entered March at 3.51% and rose as high as 4.54% during the month.

Combined, rising home values and mortgage rates have pushed the monthly payment on the typical U.S. home 38% higher than it would have been a year ago, assuming a 30-year mortgage with a 20% down payment.

“Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking,” said Jeff Tucker, Zillow senior economist.

He noted that the market is holding up despite the rising costs, but warned that growth will be stemmed at some point.

“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,” Tucker said.

One bright spot for home shoppers is that the long-awaited seasonal inventory boost finally started in March. After six consecutive months of dwindling inventory – a streak that lasted longer into the year than is typical – 11.6% more homes were available in March than in February, the largest one-month jump in Zillow’s records.

Still, inventory is 22.5% lower than it was a year ago, and the roughly 754,000 homes that were on the market in March represent a figure lower than in any month on record before January 2022.

The number of newly listed homes in March jumped 35.8% from February to about 386,000, but that remains 8.5% lower than the pace of new listings at the same time last year.

The speed of sales also picked up in March, accelerating to nine days for the typical sale, down from 11 in February.

Zillow’s home value forecast now calls for 14.9% growth through March 2023, down from a year-ahead forecast of 16.5% growth made in February.

Zillow’s existing home sales forecast has been lowered as well, to 6.09 million sales in 2022, which would mark a slight decline of 0.5% from 2021.

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