U.S. Cities Where Homebuyers Are Most Impacted by Rising Interest Rates [2023 Edition]
Mortgage interest rates are now more than double what they were in early 2021. As a result, rising home prices have started to slow down, but not by enough to offset the increased borrowing costs caused by higher rates. Home prices rose dramatically across the U.S. during the pandemic, and now, in some parts of the country, homebuyers are feeling the pain of both high mortgage rates and expensive housing.
At the beginning of the COVID-19 pandemic, the Federal Reserve took aggressive actions to help keep the economy afloat. Mortgage interest rates began to fall steadily, and the average 30-year fixed rate reached a historic low of 2.65% in January 2021. However, inflation began climbing rapidly, and the Federal Reserve started raising interest rates in March. When gradual rate hikes weren’t enough to tamp down inflation, the Fed began moving more aggressively. In November, the average 30-year fixed rate briefly topped 7%, the highest it’s been in more than two decades.
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With the slowdown of the housing market, construction companies may face financial difficulties and have to find ways to reduce operating costs to stay afloat. One approach that businesses can take is to reduce insurance costs that are tied to their business volume. For instance, the cost of general liability insurance for contractors is often calculated based on the size of the business. Therefore, if a company is experiencing a decline in business, it may be feasible to reduce its liability coverage. This also applies to errors & omissions insurance.
Due to both the drive up in home prices that began in 2020 and rising interest rates, mortgage payments have increased rapidly over the last year. The monthly mortgage payment for a median-priced home is now 66% higher than a year ago. According to data from Zillow, the national median home price increased from $318,432 to $357,544 from late November 2021 to late November 2022. At the same time, the average 30-year fixed mortgage rate went from 3.11% to 6.49%.
Both mortgage interest rates and home prices vary on a geographic basis. Additionally, some parts of the country have seen smaller declines in home prices than others. As a result, homebuyers in certain areas have been much more impacted by rising interest rates. On a regional level, the Southeast has experienced some of the largest increases in mortgage payments from last year. Out of the entire U.S., Florida homebuyers have been the most impacted by rising interest rates: mortgage payments for a median-priced home in Florida have increased by over 80% from 2021. South Carolina is close behind, with mortgage payments going up by 76%. While mortgage payments have risen dramatically across the U.S., the increase has been the smallest in Idaho and California, where mortgage payments have gone up by 52.3% and 56.3%, respectively.
To determine the locations where homebuyers are most impacted by rising interest rates, researchers at Construction Coverage analyzed the latest data from Zillow and Freddie Mac. The researchers ranked metros according to the percentage change in the monthly mortgage payment for a median-priced home from 2021 to 2022. Researchers also calculated the total change in mortgage payment from 2021 to 2022, the mortgage payment for a median-priced home, and median home price.
Here are the U.S. metropolitan areas where homebuyers are most impacted by rising interest rates.
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Increased interest rates have a far-reaching impact beyond just homeowners. Businesses, too, face various consequences due to the rise in interest rates, including higher insurance premiums. Although policies such as commercial real estate insurance or trucking insurance are relatively less affected by interest rate changes than life insurance, customers may still experience a rise in premiums during high-rate environments.
Large Metros Where Homebuyers Are Most Impacted by Rising Interest Rates
Photo Credit: Sean Pavone / Shutterstock
15. Houston-The Woodlands-Sugar Land, TX
- Percentage change in mortgage payment (YoY): +67.8%
- Total change in mortgage payment (YoY): +$641
- Mortgage payment for median-priced home (current): $1,586
- Mortgage payment for median-priced home (1 year ago): $945
- Median home price (current): $313,962
Photo Credit: Sean Pavone / Shutterstock
14. Oklahoma City, OK
- Percentage change in mortgage payment (YoY): +68.0%
- Total change in mortgage payment (YoY): +$458
- Mortgage payment for median-priced home (current): $1,131
- Mortgage payment for median-priced home (1 year ago): $673
- Median home price (current): $223,988
Photo Credit: Andrew Yoshiki / Shutterstock
13. San Antonio-New Braunfels, TX
- Percentage change in mortgage payment (YoY): +68.3%
- Total change in mortgage payment (YoY): +$698
- Mortgage payment for median-priced home (current): $1,721
- Mortgage payment for median-priced home (1 year ago): $1,023
- Median home price (current): $340,673
Photo Credit: Sean Pavone / Shutterstock
12. Memphis, TN-MS-AR
- Percentage change in mortgage payment (YoY): +68.4%
- Total change in mortgage payment (YoY): +$487
- Mortgage payment for median-priced home (current): $1,199
- Mortgage payment for median-priced home (1 year ago): $712
- Median home price (current): $237,348
Photo Credit: Sean Pavone / Shutterstock
11. Indianapolis-Carmel-Anderson, IN
- Percentage change in mortgage payment (YoY): +69.1%
- Total change in mortgage payment (YoY): +$567
- Mortgage payment for median-priced home (current): $1,389
- Mortgage payment for median-priced home (1 year ago): $821
- Median home price (current): $274,955
Photo Credit: ESB Professional / Shutterstock
10. Raleigh-Cary, NC
- Percentage change in mortgage payment (YoY): +69.5%
- Total change in mortgage payment (YoY): +$920
- Mortgage payment for median-priced home (current): $2,245
- Mortgage payment for median-priced home (1 year ago): $1,325
- Median home price (current): $444,389
Photo Credit: Sean Pavone / Shutterstock
9. Tulsa, OK
- Percentage change in mortgage payment (YoY): +70.4%
- Total change in mortgage payment (YoY): +$458
- Mortgage payment for median-priced home (current): $1,109
- Mortgage payment for median-priced home (1 year ago): $651
- Median home price (current): $219,541
Photo Credit: ESB Professional / Shutterstock
8. Atlanta-Sandy Springs-Alpharetta, GA
- Percentage change in mortgage payment (YoY): +70.9%
- Total change in mortgage payment (YoY): +$799
- Mortgage payment for median-priced home (current): $1,926
- Mortgage payment for median-priced home (1 year ago): $1,127
- Median home price (current): $381,244
Photo Credit: f11photo / Shutterstock
7. Dallas-Fort Worth-Arlington, TX
- Percentage change in mortgage payment (YoY): +71.7%
- Total change in mortgage payment (YoY): +$819
- Mortgage payment for median-priced home (current): $1,962
- Mortgage payment for median-priced home (1 year ago): $1,142
- Median home price (current): $388,388
Photo Credit: Sean Pavone / Shutterstock
6. Charlotte-Concord-Gastonia, NC-SC
- Percentage change in mortgage payment (YoY): +73.5%
- Total change in mortgage payment (YoY): +$829
- Mortgage payment for median-priced home (current): $1,956
- Mortgage payment for median-priced home (1 year ago): $1,127
- Median home price (current): $387,184
Photo Credit: Sean Pavone / Shutterstock
5. Nashville-Davidson–Murfreesboro–Franklin, TN
- Percentage change in mortgage payment (YoY): +75.2%
- Total change in mortgage payment (YoY): +$984
- Mortgage payment for median-priced home (current): $2,294
- Mortgage payment for median-priced home (1 year ago): $1,309
- Median home price (current): $454,084
Photo Credit: Sean Pavone / Shutterstock
4. Jacksonville, FL
- Percentage change in mortgage payment (YoY): +78.0%
- Total change in mortgage payment (YoY): +$832
- Mortgage payment for median-priced home (current): $1,898
- Mortgage payment for median-priced home (1 year ago): $1,066
- Median home price (current): $375,692
Photo Credit: Songquan Deng / Shutterstock
3. Orlando-Kissimmee-Sanford, FL
- Percentage change in mortgage payment (YoY): +79.4%
- Total change in mortgage payment (YoY): +$894
- Mortgage payment for median-priced home (current): $2,020
- Mortgage payment for median-priced home (1 year ago): $1,126
- Median home price (current): $399,902
Photo Credit: Henryk Sadura / Shutterstock
2. Tampa-St. Petersburg-Clearwater, FL
- Percentage change in mortgage payment (YoY): +79.9%
- Total change in mortgage payment (YoY): +$876
- Mortgage payment for median-priced home (current): $1,973
- Mortgage payment for median-priced home (1 year ago): $1,097
- Median home price (current): $390,617
Photo Credit: Just dance / Shutterstock
1. Miami-Fort Lauderdale-Pompano Beach, FL
- Percentage change in mortgage payment (YoY): +83.9%
- Total change in mortgage payment (YoY): +$1,101
- Mortgage payment for median-priced home (current): $2,414
- Mortgage payment for median-priced home (1 year ago): $1,312
- Median home price (current): $477,823
Detailed Findings & Methodology
To determine the locations where homebuyers are most impacted by rising interest rates, researchers at Construction Coverage analyzed the latest data from Zillow’s Zillow Home Value Index (ZHVI), a measure of typical home value, and Freddie Mac. The researchers ranked metros according to the percentage change in the monthly mortgage payment for a median-priced home from 2021 to 2022. In the event of a tie, the metro with the largest total change in mortgage payment was ranked higher. Researchers also calculated the mortgage payment for a median-priced home, and median home price. Median home price was calculated from Zillow’s ZHVI, and the monthly mortgage payment for a median-priced home was calculated by assuming a 30-year fixed rate mortgage with a 20% down payment.
To improve relevance, only metropolitan areas with at least 100,000 people were included in the analysis. Additionally, metro areas were grouped into the following cohorts based on population size:
- Small metros: 100,000–349,999
- Midsize metros: 350,000–999,999
- Large metros: more than 1,000,000
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