Sdi Productions | Electronic+ | Getty Images
Home Affordability slightly improved buyer this summer, according to a recent report.
The median new mortgage payment in June was $2,167, down 2.4% from $2,219 in May. according to New data from the Mortgage Bankers Association. The index measures how new monthly mortgage payments change over time relative to income.
Declines in the index indicate improvements in borrower affordability, which occurs when loan application amounts and mortgage rates fall or homebuyers’ incomes rise.
“Homebuyer affordability continues to improve for the second consecutive year as lower mortgage rates continue to increase purchasing power and lure some borrowers back into the housing market,” Edward Seiler, MBA’s vice president of housing economics, wrote in the release. Improved month on month.
More from Personal Finance:
The Fed rate cut is coming. What homeowners, buyers need to know
Home insurance premiums rose 21% last year, partly due to climate change
‘Climate gentrification’ driving up prices for long-time Miami residents
Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors, also sees a positive outlook for homebuyers.
“Housing affordability is improving slightly, but it’s moving in the right direction,” he said.
The ‘big picture’ shows payments remain high
The median amount of new loan applications fell to $320,512 in June from $325,000 in May, according to MBA data provided to CNBC, indicating that home price growth is also slowing.
A slight drop in mortgage rates in June certainly helped buyers, Yun said.
According to data provided by Freddie Mac through the Federal Reserve, the 30-year fixed-rate mortgage rate fell to 6.78% on July 25 from 7.22% on May 2.
But in reality, he said, that’s “very small progress” – the typical monthly mortgage payment is essentially double what it was before the coronavirus outbreak. Before COVID-19, a $1,000 mortgage was the norm; today, he said, the price is more than $2,000.
“From a larger perspective, the situation has improved significantly compared to before the COVID-19 outbreak, but on a monthly basis, the situation has improved slightly,” Yun said.
More sellers, less buyer competition
investors think United States Federal Reserve Can lower interest rates about three times In the second half of the year, this will “further improve housing affordability,” Yin added.
Experts say that while the housing market is not yet a buyer’s market, more supply and falling interest rates do create favorable conditions for buyers.
Housing affordability, while slightly improving, is moving in the right direction.
Lawrence Yun
Chief Economist and Senior Vice President of Research, National Association of Realtors
“The market will definitely tilt more toward buyers,” said Li Chen, director of economic research at online real estate brokerage Redfin. He said the market is balancing itself.
Zillow senior economist Orphe Divounguy said that while there are still affordability challenges overall, things are “moving toward a more neutral market.”
In some areas, buyers are becoming more discerning as more listings become available. The total registered housing inventory at the end of June was 1.32 million units, an increase of 3.1% from the previous quarter and an increase of 23.4% from the same period last year. according to To Nar. The supply of unsold inventory was 4.1 months, up from 3.7 months in May and 3.1 months a year earlier.
“That’s very good news for the buyer,” Yun said, because you’re less likely to get into a bidding war.
Competition is easing fastest in the South, with all major Southern markets except Dallas and Raleigh being either neutral or buyer-friendly, according to June 2024 Zillow Home Market Report.
“Inventory increases undoubtedly mean buyers have more choices,” said Selma Hepp, chief economist at CoreLogic. “But this is only regional. And those companies with the largest inventory increases are facing other problems,” such as high insurance costs. cost.
Diwanji said some sellers are lowering prices to attract buyers.
“Sellers have to do more to attract buyers,” he said. “Let’s see One in four sellers is cutting prices — the most June in the past six years — in an attempt to sway buyers.
About one-fifth, or 19.8%, of homes for sale saw price reductions in June, the highest level ever for a June. according to to Redfern. That’s up from 14.4% a year ago.
“Sellers always try to maximize prices, but sellers should be aware that competition will be more intense,” Yun said.
Homebuilders are also struggling to attract buyers: about 31% are cutting prices to increase home sales, up from 29% in June and 25% in May. according to Survey conducted by National Association of Home Builders, July 2024.
However, Yun said the “first thing” for buyers is to “stay within the budget.” “Falling mortgage rates doesn’t mean they’re putting too much pressure on their budgets.”