Homebuyers have seen their purchasing power jump almost 10% in just three months, according to an analysis done by Redfin News.
- “A homebuyer on a $3,000 monthly budget can afford a $453,000 home with a 6.7% mortgage rate, roughly this week’s average. That buyer has gained nearly $40,000 in purchasing power since October 2023, when they could have bought a $416,000 home with an average rate of 7.8%.”
- “The monthly mortgage payment on the typical U.S. home, which costs roughly $363,000, is $2,545 with a 6.7% rate. The monthly payment was nearly $200 higher–$2,713–when rates were at 7.8%.”
Consumers Adjust. Redfin agents report that buyers have come to terms with rates in the 6% range. Shoshana Godwin, a Redfin Premier agent in Seattle, said “Bidding wars are picking up as mortgage rates decline and inventory stays low. I’ve seen a few homes get 15-plus offers recently, and one got more than 30,”
Where Are Rates Going. Redfin economists predict mortgage rates will end the year lower than they started, but the path is likely to be bumpy. However, a new Bloomberg survey was a little more specific.
- “The rate on a 30-year, fixed mortgage is expected to fall to 5.5% at the end of the year, according to the median from 236 respondents. That’d be down more than a full percentage point from its current level of about 6.69%, and the first annual decline after three straight years of gains.”
BOTTOM LINE: Rates are slowly falling, demand is rising along with hopes for housing in 2024!