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Sep 171 min read

Falling Mortgage Rates Are Improving Affordability

Are they blowing in the right direction?

Market Perspective: Fast Facts About the Housing Market.

Thanks to lower mortgage rates, home affordability has improved even as home prices have continued to rise modestly.[1]


Average 30 year fixed mortgage rates dropped to 6.2% for the week ending September 12, 2024. This is down 1.6% points from post-pandemic high, to the lowest level since February 2023. For an average-priced home, each quarter-point rate reduction equals a $60 drop in monthly payments. Arrows and a chart demonstrate housing affordability at lower rate scenarios. Inventory continues to build as buyers wait out the market. Number of homes actively for sale in August grew 35.8% year over year. This is the 10th straight month of growth to the highest number since May 2020. Total number of unsold homes went up 20.9% year over year (this includes homes under contract). Sellers may also be waiting for more buyer interest. Newly listed homes in August fell 0.9% year over year. This is the first negative reading in nearly a year. Buyer interest is perking up ahead of further anticipated mortgage rate drops. Redfin's Homebuyer Demand Index raised 4% month over month. This is based on agent-reported activity related to tours and other services.

Federal Reserve cut the fed funds rate by 50 basis points at its September meeting — the first rate cut in over four years.[5]


 

Sources:
  1. ICE Mortgage Monitor Report, September 2024.

  2. Freddie Mac, Primary Mortgage Market Survey, September 12, 2024.

  3. Realtor.com®, August 2024 Monthly Housing Market Trends Report.

  4. Redfin, "Housing Payments Have Dropped to Their Lowest Level Since January. But Home Sales Are Still Falling," September 5, 2024.

  5. Federal Open Market Committee, Target Federal Funds Rate.

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