With mortgage rates below 7%, home buyers’ budgets can
afford more home than the same budget could in April.
With the recent dip in mortgage rates, home buyers have
gained approximately $22,500 in purchasing power compared to
when mortgage rates peaked at 7.5% in April.
According to an analysis by Redfin, a buyer with a $3,000
monthly budget can afford a $447,750 home with the current
mortgage rate of approximately 6.85%, an improvement from
April when the same budget could only afford a $425,500 home.
Another signal of improving affordability conditions for
buyers is that the monthly mortgage payment on the typical U.S.
home—which costs approximately $400,00—has declined to
$2,647 with the 6.85% mortgage rate. With the average mortgage
rate of 7.5% in April, the monthly mortgage payment on a typical
home was $2,814.
According to Redfin, new listings of homes for sale are up
7% year over year and the total number of homes for sale is near
its highest level since late 2020, another positive sign for
prospective buyers.
“Now is a good time—at least compared to the recent
past—for serious house hunters to get under contract on a home,”
says Redfin chief economist Daryl Fairweather. “The combination
of declining mortgage rates, rising supply, and a lot of inventory
growing stale means buyers have a window where they have more
purchasing power than earlier in the year and more homes to
choose from.”
In addition to more homes on the market, homes are sitting
on the market longer than usual. More than 60% of homes listed
in May had been on the market for at least 30 days without going
under contract, up from 50% two years earlier. Two in five homes
had been listed for at least two months, up from 28% two years
earlier.
“It’s hard to say how long the window will last. Declining
rates should bring many home buyers back to the market soon,
which means competition would tick up and home prices increase
even faster than they already are,” says Fairweather. “It’s also
possible rates drop further in 2025, which would make monthly
costs decline more and increase competition even more.”
Comentarios