As we approach the latter half of the year, the housing market is showing signs of improvement for potential buyers. Recent data suggests that home affordability is on a modest upswing, largely due to a decrease in mortgage rates.

Falling Mortgage Rates Bring Relief

Mortgage rates have recently dipped to a six-month low, with the 30-year fixed-rate mortgage falling to 6.78% on July 25 from 7.22% in May. This decline has led to a slight improvement in homebuyer affordability. The median new mortgage payment decreased by 2.4% in June, from $2,219 in May to $2,167, according to the Mortgage Bankers Association.

Edward Seiler, MBA’s associate vice president of housing economics, noted that this drop in mortgage payments is enhancing purchasing power and attracting buyers back into the market. Lawrence Yun, chief economist at the National Association of Realtors, also highlighted that affordability is improving, albeit modestly.

The Bigger Picture

Despite these improvements, the overall landscape remains challenging. The typical monthly mortgage payment has essentially doubled from pre-COVID levels. Before the pandemic, a $1,000 mortgage payment was common; today, it’s above $2,000. While the recent decrease in rates is beneficial, it’s a small step relative to the significant rise in payments over the past few years.

More Inventory and Less Competition

Another positive development is the increase in housing inventory. At the end of June, total housing inventory was 1.32 million units, marking a 3.1% increase from May and a 23.4% increase from the previous year. This boost in inventory is creating a more balanced market, reducing competition, and easing bidding wars, particularly in the South.

Sellers are responding to these market conditions by adjusting their prices. Approximately 19.8% of homes had a price cut in June, the highest level for any June in the last six years. Builders are also reducing prices to attract buyers, with about 31% of builders cutting prices in July.

Looking Ahead

While the market is moving towards a more favorable environment for buyers, it’s essential to stay within your budget. As mortgage rates may continue to fluctuate, maintaining financial discipline remains crucial. The anticipated Federal Reserve interest rate cut could further improve housing affordability in the coming months.

In summary, while challenges persist, recent developments in mortgage rates and inventory levels are creating more favorable conditions for buyers. If you’re considering entering the market, now might be an opportune time to explore your options and take advantage of these improvements.

https://www.cnbc.com/2024/07/30/here-are-the-signs-of-an-improving-housing-market.html

If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526