Notes: Chart plots the monthly payment to purchase a home that sold for $250,000 in January 2020, based on a 20 percent down payment and excluding monthly escrow payments, which are used to pay property taxes and homeowner’s insurance. Calculations extend through September 2023. Gray shading depicts National Bureau of Economic Research (NBER)-defined recession.
Sources: Zillow, Freddie Mac, NBER, and author’s calculations. All data sources accessed through Haver Analytics.
Rising home prices and interest rates since January 2020 have more than doubled the monthly mortgage payment required to purchase a home (blue line). In 2020–21, the increase exclusively reflected rising prices (green line). Since then, the increase has primarily reflected rising interest rates (orange line). On their own, rising interest rates have increased monthly payments by more than 60 percent since late 2021, illustrating the strong incentive for owners to remain in their current home rather than sell and purchase a different home at a similar price.
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