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High interest rates have had an unexpected impact on U.S. housing, with home prices rising instead of falling like expected, The Wall Street Journal reports.
Costlier mortgages have pushed residential values higher, with the value of the median existing home rising to a record $419,300 in May, according to the National Association of Realtors. Before the pandemic, it was $270,000.
The “lock-in” effect of ultracheap mortgages secured when interest rates were low, keeping owners in their homes, is considered an unforeseen consequence of years of easy money. Two-thirds of outstanding U.S. mortgages have a rate below 4%, but were these homeowners to move, they would have to pay close to 7% for a new 30-year mortgage. The gap hasn’t been as wide since at least the late 1980s.
