Rising Mortgage Costs Across U.S. Markets
The cost of financing a home has surged over the past two years, with median mortgage payments increasing by 22% from May 2022 to May 2024. This increase, driven by higher home prices and rising mortgage rates, has put homeownership further out of reach for many Americans. According to Redfin, mortgage payments have risen from $2,319 to $2,835, making the dream of owning a home increasingly difficult for those with stagnant wages.
However, the impact of these changes is not uniform across the country. Various cities have experienced different rates of mortgage payment increases, with some markets seeing much sharper rises than others. These shifts reflect varying levels of home prices, income growth, and mortgage rate changes across the country.
Cities with the Highest Mortgage Payment Increases
Redfin’s analysis of mortgage payment increases for 50 of the largest U.S. cities shows that Providence, Rhode Island, has seen the most significant jump, with mortgage payments rising by 45% since May 2022. Other cities experiencing major increases include:
- Newark, New Jersey: 43%
- Anaheim, California: 40%
- Milwaukee, Wisconsin: 37%
- New Brunswick, New Jersey: 36%
These cities have seen substantial increases in home prices, contributing to higher mortgage payments. For example, while home prices have rebounded in areas like New York and Los Angeles, Providence has remained a popular market for second homes, driving up demand and mortgage costs.
Midwestern Markets Experience Steady Growth
While the overall trend is one of rising costs, many Midwestern cities have seen more moderate increases in mortgage payments. Areas such as Cleveland, Cincinnati, and Columbus, Ohio, and Pittsburgh have experienced less dramatic price hikes, yet they remain well below the national median of $2,835. Buyers in these cities have been helped by more affordable housing prices compared to the coastal markets, although mortgage rates still pose a challenge.
Mortgage Payment Growth Slows in Texas and Other Markets
Texas, a state known for its affordable housing market, has seen some of the lowest increases in mortgage payments. Cities like Austin, San Antonio, and Fort Worth have experienced increases of just 11% to 14% over the past two years. In Austin, for example, home prices were once skyrocketing due to a surge of remote workers seeking larger homes, but a housing construction boom and cooling demand have helped stabilize the market.
Other cities such as Phoenix, Las Vegas, and Denver have also seen more moderate increases, with home construction and an ample supply of land helping to keep prices in check.
San Francisco’s Slow Recovery
San Francisco, one of the most expensive housing markets in the country, has seen only an 18% increase in mortgage payments over the last two years. This is largely due to the city’s slower recovery from the pandemic, during which it saw a significant population decline. Despite the slower pace of growth in mortgage costs, home prices in San Francisco remain high, with the median home price hovering around $1.4 million.
Implications for Homebuyers
The increase in mortgage payments, particularly in markets like Providence and Newark, reflects the broader challenges in the U.S. housing market. Rising interest rates and escalating home prices have made homeownership more difficult for many Americans, especially in high-demand areas. However, in cities where home prices are more moderate, such as those in the Midwest and Texas, buyers are still finding relatively affordable options, although rising mortgage rates remain a concern.
As the housing market continues to adjust, prospective buyers will need to weigh their options carefully. Areas with lower price increases may offer some relief, but higher mortgage rates will still be a significant hurdle. For renters, the ongoing rise in homeownership costs could continue to drive demand for rental properties, keeping rental prices high in many markets.
As these trends evolve, monitoring shifts in mortgage rates, housing supply, and demand will be crucial for understanding where homeownership remains achievable and where it may remain out of reach.