It hurts, and it keeps hurting — but how much depends entirely on which road, and that is a much bigger range than most buyers assume.
Almost every objection to a house can be renovated away. What is behind it cannot. That is the whole reason the discount holds: when you sell, you are selling to a buyer with exactly the same reservation you had, and there is nothing you can do between now and then to change their mind.
In a hot market the gap narrows and people conclude it has gone away. It has not — it reappears the moment buyers have choice again, which is precisely the market you are most likely to be selling into if you ever have to move quickly.
Buying a road-backing home is not the mistake. Paying the community's normal price for one is.
A quiet residential collector with a mature hedge and a solid fence is a mild issue that many buyers will trade for a better house. A genuine arterial or a freeway is a different property altogether. What actually separates them:
Plenty of good homes back roads, and the discount is exactly what lets some buyers into a community they otherwise could not reach. Go in with your eyes open: stand in the backyard at rush hour with your eyes shut, because photographs never capture noise and it is the thing buyers most often say they underestimated. Then negotiate against comparable sales from road-backing homes, not from interior lots in the same community — you will be buying at that discount and selling at it, so the number you pay matters more here than almost anywhere else.
See also what actually hurts resale value and lot shape and position.