Housing Trends & Analysis

Monthly Cost of Buying a Home Increased 15 Percent Over the Past Year

The monthly mortgage payment needed to buy a median-priced U.S. home (valued at $259,000) rose by 15 percent, or $219, to $1,651 over the past 12 months.

More than half of the increase in housing costs was due to the 30-year mortgage rate rising from roughly 3.9 percent a year ago to about 4.9 percent today, with the remainder coming from a 6 percent increase in national home prices.

The mortgage-rate increase picture is more varied at the state and MSA levels. Over the past year, Nevada had the largest increase among all the states at 26 percent, followed by Idaho (23 percent), Washington (21 percent) and Colorado (21 percent).

When you consider the monthly mortgage payment needed to buy a median-priced home,1 California saw the largest increase — $593 — followed by Hawaii ($534), Washington ($444) and Colorado ($425). Northeastern states, where home prices grew the slowest nationally, experienced the smallest increases. At the metro level, the year-over-year change in costs ranged from an increase of 30 percent in San Jose, California, to slightly negative territory for Decatur, Illinois. In dollar terms, the increase in costs varied from San Jose’s $1,861 to a decrease of $20 in East Stroudsburg, Pennsylvania.

1We assume a 10 percent down payment, the Freddie Mac 30-year fixed mortgage rate +0.75 percent to cover mortgage insurance, risk add-ons, etc.

About the author

Manhong Feng

Senior Housing Economist, Arch Capital Services Inc., Mortgage Group
Manhong Feng uses statistical tools, econometric analysis and advanced programming skills to forecast regional housing prices and conduct research on housing markets, mortgage markets and regional and international economies. Prior to joining Arch Capital Services Inc., she was a Senior Economist at Fannie Mae. She received her Ph.D. in economics from the University of Pennsylvania and her B.A. in international finance from Peking University.