For the past couple of years, it’s been tough for a lot of homebuyers to make the numbers work. Home
prices shot up. Mortgage rates too. And a number of people hit pause because it just didn’t feel possible.
Maybe you were one of them.
But there’s some encouraging news. If you’ve been waiting for a better time to jump back in, affordability
may finally be showing signs of improvement this fall.
The latest data from Redfin shows the typical monthly mortgage payment has been coming down, and is
now about $290 lower than it was just a few months ago (see graph below):
And here’s why this is happening. The cost of buying a home really comes down to three things:
Mortgage rates
Home prices
Your wages
Right now, all three are finally moving in a better direction for you. While that doesn’t mean it’s suddenly
easy to buy at today’s rates and prices, it does mean it’s not as challenging.
1. Mortgage Rates
Mortgage rates have come down compared to earlier this year. In May, they were roughly 7%. And now,
they’re closer to 6.3% (see graph below):
That may not sound like a big deal, but it does matter. Even small changes in rates can make a difference
in your future monthly payment. Compared to when rates were 7%, if you take out an average $400K
mortgage now at 6.3%, it’ll cost about $190 less a month based on just rates alone.
And for some people, that’s been enough to make buying a home possible again. As Joel Kan, VP and
Deputy Chief Economist at the Mortgage Bankers Association (MBA), explained on September 10 th :
“The downward rate movement spurred the strongest week of borrower demand since 2022 . . . Purchase
applications increased to the highest level since July and continued to run more than 20 percent ahead of
last year’s pace.”
2. Home Prices
After several years of prices rising very rapidly, price growth has finally slowed. As Odeta Kushi, Deputy
Chief Economist at First American, puts it:
“National home price growth remains positive, but muted — low single digits — and we expect this trend
to continue in the second half of the year.”
For buyers, that’s actually a big relief. That moderation makes it easier to plan your budget. And in some
markets, prices have even dipped slightly. If you’re in one of the markets, you may be able to find
something that’s more affordable than you’d expect.
3. Wages
According to the Bureau of Labor Statistics (BLS), wages are up near 4% annually. Lawrence Yun, Chief
Economist at NAR, explains why that number is so important right now: “Wage growth is now comfortably
outpacing home price growth, and buyers have more choices.”
In other words, the typical paycheck is rising faster than home prices right now, which helps make buying
a little more affordable. Now, it’s not a big difference, but in a market like this, every bit counts.
What This Means for You
Lower rates, slower price growth, and stronger wages might be enough to make the numbers finally work
for you this fall.
While affordability is still tight, it’s a little easier on your wallet to buy now than it was just few months ago.
Remember, data from Redfin shows the typical monthly mortgage payment is already around $290 lower
than it was earlier this year.
Have you been wondering if it’s worth taking another look at buying?
Work with a professional to re-run the numbers. Together you can go over your budget, see what’s
changed, and figure out if this fall is the time to turn window-shopping into key-turning.