Analysis Reveals Selling Homes Unfavorable; Challenges for Homebuyers

A recent analysis conducted by Intercontinental Exchange Inc. (ICE) sheds light on the challenging landscape facing homebuyers and sellers, suggesting that selling a house now may not be financially prudent. The analysis indicates significant increases in monthly mortgage payments for buyers looking to move up to pricier homes compared to previous years.

Traditionally, buyers upgrading to a home that is 25% more expensive would pay around $400 more per month. However, the current scenario sees buyers needing to pay an additional $1,384 per month, which has led many homeowners to stay put, contributing to the shortage of homes for sale. This trend is particularly pronounced for buyers who purchased or refinanced homes in 2020 and 2021 at historically low rates, as the financial impact is even more significant. For these buyers, monthly payments for a lateral move increase by 60% and for an upgrade by 132%.

Despite record-high levels of home equity, the substantial increase in monthly payments when upgrading to larger homes is discouraging homeowners from selling. This phenomenon, coupled with rising mortgage rates above 7% and inventory levels still 40% below pre-pandemic averages, is creating a challenging environment for move-up buyers.