How Differing Interest Rates Can Price Some Buyers In, Out

Low mortgage rates can be a cost-savings boon to home buyers. But even the slightest difference in rates can price some out.
The National Association of Home Builders, on its Eye on Housing blog, offers various scenarios of the price differences in affordability with interest rates. For example, take the median new-home price in 2020 of $345,908. The buyer gets a standard mortgage interest rate of 3.75%. If the interest rate moves up just a quarter of a percentage point, it would price about 1.3 million U.S. households out of the market, according to the NAHB’s analysis. The NAHB factored in a 10% down payment as well as an annual premium for private mortgage insurance, property taxes, and homeowner’s insurance into its calculations.
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