Client Briefing • Housing Affordability
Rates Came Down. Why Didn’t Affordability Come Back?
A simple comparison showing why monthly housing payments have stayed stubbornly high: home prices moved higher, taxes moved higher, and insurance moved higher — even as mortgage rates improved from the 2023 peak.
Prepared for client education by The Rate Update
Home Price Change
+7.7%
$387,800 to $417,700
Mortgage Rate
8.00% → 6.50%
Rate improved by 1.50 percentage points
Taxes + Insurance
+$87/mo
Average monthly increase
Payment Change
$-77/mo
Estimated PITI difference
The Main Point
Buyers do not pay a mortgage rate. They pay a full monthly housing payment. When home prices, property taxes, and homeowners insurance rise, they can erase much of the benefit from lower mortgage rates.
Side-by-Side Payment Comparison
| Category | November 2023 Example | Current Example | Change |
|---|
| National median existing-home price | $387,800 | $417,700 | +$29,900 |
| Down payment assumption | 20% / $77,560 | 20% / $83,540 | +$5,980 |
| Estimated loan amount | $310,240 | $334,160 | +$23,920 |
| Mortgage rate used | 8.00% | 6.50% | -1.50% |
| Principal & interest payment | $2,276/mo | $2,112/mo | $-164/mo |
| Average property taxes | $4,062/yr • $338/mo | $4,427/yr • $369/mo | +$30/mo |
| Average homeowners insurance | $2,377/yr • $198/mo | $3,057/yr • $255/mo | +$57/mo |
| Estimated full PITI payment | $2,813/mo | $2,736/mo | $-77/mo |
Rate savings helped
$-164/mo
The lower mortgage rate reduces the principal and interest payment, even though the loan amount is higher.
But other costs rose
+$87/mo
Higher average property taxes and homeowners insurance absorbed a large part of the rate improvement.
What This Means for Buyers
- Home prices did not collapse. National median prices continued grinding higher from late 2023 to today.
- Lower rates helped, but they did not reset affordability. A 1.50% rate improvement sounds huge, but the monthly payment barely changed in this example.
- Taxes and insurance matter more than people realize. Many buyers focus only on principal and interest, but the real payment is PITI.
- Waiting for lower rates is not a complete strategy. If prices, taxes, and insurance keep rising, a lower rate can still lead to a similar monthly payment.
“Prices go up, rates come down, and the payment can still land in almost the same place.”
Client-Friendly Explanation
In November 2023, mortgage rates were near the peak and a median-priced home created a very high payment. Today, the mortgage rate is lower, but the home price is higher, the loan amount is higher, property taxes are higher, and homeowners insurance is higher. That is why many buyers still feel stuck.
The lesson is simple: affordability is not just about the rate. It is about the full monthly payment. A buyer waiting for rates to fall may not see much payment relief if the cost of the house and the cost to own the house keep moving higher.
Sources and data notes:- National median existing-home sales price: November 2023 value shown by YCharts historical NAR existing-home median sales price data; current April 2026 median price of $417,700 reported by the National Association of REALTORS®.
- Mortgage rates: 8.00% used as a late-2023 peak-rate client example; Freddie Mac reported the 30-year fixed rate at 6.37% on May 7, 2026. This briefing uses 6.50% as a simple current-market illustration.
- Property taxes: ATTOM reported the average single-family property tax bill was $4,062 in 2023 and $4,427 in 2025.
- Homeowners insurance: Insurify reported average home insurance at $2,377 in 2023 and projected $3,057 by the end of 2026.
Educational disclaimer: This briefing is for educational and informational purposes only and is not a mortgage quote, loan estimate, commitment to lend, financial advice, legal advice, or tax advice. Payment examples are estimates only and exclude items that may apply, including but not limited to mortgage insurance, HOA dues, local assessments, flood insurance, maintenance, utilities, and closing costs. Actual loan terms, interest rates, payments, taxes, insurance premiums, and program availability depend on borrower qualifications, property details, location, market conditions, lender guidelines, and underwriting approval. Equal Housing Lender.
