A decline in mortgage rates in September provided significant relief for middle-income households, enhancing affordability levels to their highest since February 2023, as reported by Zillow. At an average mortgage rate of 6.18% in September—marking a two-year low—households earning the median income in the U.S.
could afford 27.7% of homes available on the market. This figure represents the highest proportion in 19 months, in contrast to May’s 22.7% when rates averaged 7.06%. 'Affordability remains the top challenge for first-time home buyers especially, and buying power can change quickly with the unpredictable nature of mortgage rates,' stated Orphe Divounguy, a senior economist for Zillow Home Loans.
In October, mortgage rates averaged 6.43%, still reflecting greater affordability for middle-income households across all top 50 metros tracked by Zillow on a year-over-year basis. The most substantial improvement has been seen in Sun Belt markets, while major markets in California, the New York City metro area, and Boston have continued to struggle with affordability issues, the analysis revealed.
'While there's no guarantee, signs point to rates moving a bit lower into next year,' said Divounguy. 'However, the path will be bumpy, and buyers should stay ready to move forward when the time is right for them.' As of November 14, mortgage rates had risen to 6.78%, as reported by the digital real estate broker.
Additionally, the Mortgage Bankers Association announced that mortgage application volume increased for the first time in seven weeks during the week ending November 8. Price: 75.16, Change: +1.84, Percent Change: +2.51.