Surging mortgage rates and sky high prices last year slammed the brakes on what had been a red-hot housing market during the first two years of the pandemic. Home sales cratered as higher borrowing costs combined with years of rising home prices pushed homeownership out of reach for many Americans, especially first-time buyers.
Homeowners who sold last year still reaped the financial rewards from years of home equity gains, however. The return on investment for a median-priced U.S. home sold last year was a whopping 51.4%, up from 44.6% in 2021, Attom found.
The Irvine, California-based firm calculated the return on investment by comparing the sale of a median-priced U.S. home in 2022 to the previous median purchase price.
The national median home price has more than doubled since 2012, when the U.S. housing market was just beginning to recover from the bursting of the housing bubble and Great Recession. It rose 10% last year to $330,000, an all-time high, according to Attom.
Still, that gain is below 2021′s 17.6% rise, when the housing market was still being fueled by historically low mortgage rates.
The average rate on a 30-year mortgage hit a two-decade high of 7.08% last fall as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation.
Mortgage rates have been falling in recent weeks. The average rate on a 30-year home loan slipped to 6.15% this week, the lowest since September, mortgage buyer Freddie Mac said Thursday. A year ago, the average rate was 3.56%.