According to recent reports, home affordability for buyers has seen a slight improvement this summer. The median new mortgage payment dropped to $2,167 in June, a 2.4% decline from the previous month. This decrease in the index indicates that borrower affordability has improved, which can be attributed to lower loan application amounts, mortgage rates, or increased homebuyer earnings.
Edward Seiler, the associate vice president of housing economics at the Mortgage Bankers Association, noted that declining mortgage rates have increased purchasing power and enticed some borrowers back into the housing market. Lawrence Yun, the chief economist and senior vice president of research at the National Association of Realtors, also sees promising signs for homebuyers, stating that housing affordability is improving modestly in the right direction.
Despite these improvements, the median loan amount on new applications fell slightly in June, indicating that home-price growth is moderating. Yun emphasized that while there has been a slight improvement in monthly mortgage payments, the overall increase compared to pre-Covid years is substantial.
Experts also suggest that the housing market is shifting towards a more buyer-friendly environment. Chen Zhao, the economic research lead at Redfin, and Orphe Divounguy, a senior economist at Zillow, both agree that conditions are moving towards a more neutral market with increasing inventory and declining rates.
In some regions, buyers are becoming more selective as more listings become available, leading to a decrease in competition. Sellers are also adjusting their prices to attract buyers, with one in four sellers cutting prices in an effort to sway buyers.
Overall, while there are positive indicators for buyers in the current housing market, experts caution buyers to stay within their budget despite declining mortgage rates. As the market continues to evolve, it is important for both buyers and sellers to adapt to the changing conditions.