Saving money to buy a house? Your dollar goes half as far as it did at the end of 2020, new data shows

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A tough market for homebuyers keeps getting tougher as the combination of rising prices and climbing mortgage rates makes it even harder to afford a home, new data shows.

In spite of these challenges, people are still buying homes. About 4 million are sold every month. But to a shocking extent, rising mortgage rates and the shortage of homes for sale — which feeds rising prices and bidding wars — has weakened their financial position.

People today are borrowing significantly more money for homes at much higher interest rates than just a few years ago. Overall, a homebuyer’s dollar goes about half as far as it did at the end of 2020.

In December of 2020, mortgage rates hit some of their lowest levels ever, with a 30-year fixed available for 2.68%. That was a steep drop from 3.78% a year earlier.