Mortgage rates increased further this week, following the bond market trend. According to Freddie Mac, the average rate on a 30-year fixed mortgage rose to 6.50% from 6.32% the previous week. Even with this increase, owning a home is still affordable for Americans if they can put 20% down. The monthly mortgage payment is $1,880 for a median-priced home.
Despite higher mortgage rates, the homeownership rate rose in 2022. Even though many buyers were priced out due to historic low affordability, more Americans were able to become homeowners. There were about 1.6 million more homeowners in 2022 than the previous year. While many existing homeowners opt to stay put due to higher rates, some renters were able to purchase a home amid rising affordability challenges. Historically speaking, the homeownership rate continues to be below the pre-recession peak of 69.2% (in 2004) but is still above the historical average of 65.6%. With mortgage rates projected to stabilize below 6% in the second half of the year, more Americans will likely become homeowners, boosting the homeownership rate this year as well.