Unpredictable rate movements are quickly
changing the affordability picture for home shoppers
- Lower mortgage rates in September brought the share of homes a
middle-income household could comfortably afford to a 19-month
high.
- Mortgage rates have already climbed back to nearly 7%,
highlighting the need for real-time data for buyers to understand
what they can afford.
- Mortgage rates remain lower than they were a year ago. Even
with the increase in October, the share of affordable listings was
greater than a year earlier in all of the nation's 50 largest metro
areas.
SEATTLE, Nov. 19,
2024 /PRNewswire/ -- A middle-income household would
have been able to afford more homes on the market in September than
in any month in more than a year and a half, a new Zillow® analysis
shows. Mortgage rates fell to a two-year low in September, opening
up more possibilities for home buyers. However, the sharp reversal
in mortgage rates in the weeks since has likely pushed some
prospective home buyers back to the sidelines.
Mortgage rates have been moving quickly over the past few
months, which can make a big impact on what home shoppers can
afford. In May, when mortgage rates averaged
7.06%,1 a household making the median
U.S. income could have comfortably afforded 22.7% of homes listed
for sale across the country.2 In
September, with mortgage rates averaging 6.18%, that jumped to
27.7% of homes for sale — the highest share since February 2023.
"Affordability remains the top challenge for first-time home
buyers especially, and buying power can change quickly with the
unpredictable nature of mortgage rates," said Orphe Divounguy, a
senior economist for Zillow Home Loans. "Buyers should expect more
ups and downs ahead for mortgage rates. While there's no guarantee,
signs point to rates moving a bit lower into next year. However,
the path will be bumpy, and buyers should stay ready to move
forward when the time is right for them."
Mortgage rates are proving to be extremely volatile, having
risen to 6.78%, as of November 14,
showing just how quickly a home can move into or out of a
prospective home buyer's budget in today's market. Home shoppers
can stay on top of volatile rates with Zillow Home Loans'
BuyAbilitySM tool. It incorporates real-time
mortgage rates to provide buyers with a personalized estimate of
the home price and monthly payment that fits within their budget at
any given moment. Now, home shoppers can use their BuyAbility
estimate — rather than a price range — to shop for homes on Zillow
that they can afford. If mortgage rates fall or a shopper's credit
score improves, they will see more listings enter their BuyAbility
range.
October market trends
In October, when mortgage
rates averaged 6.43%, the share of listings affordable for a
middle-income household was greater than a year earlier in all of
the nation's 50 largest metro areas. In 12 markets, more than half
of homes listed for sale in September were affordable, led by
Pittsburgh (72.1%), St. Louis (64.2%), Buffalo (63.7%) and Detroit (61.5%).
Many markets with the greatest gains from last year in the share
of listings affordable to a middle-income household are in the Sun
Belt. Austin (+13.2 percentage
points) has seen the biggest increase, followed by Raleigh (+12.4), San
Antonio (+12.2), Phoenix
(+12.1) and Minneapolis
(+11.9).
Large markets in California,
along with a handful in the Northeast, are among the least
affordable in the U.S. Less than 15% of listings in October were
affordable to a middle-income household in Los Angeles (1.6%), San Diego (4.2%), San Jose (7.2%), Sacramento (10.5%), the New York City metro area (11.4%), Boston (11.6%), Riverside (12.6%) and San Francisco (14%).
|
Metro
Area*
|
Share of
Affordable
Listings (October
2024)**
|
Share of
Affordable
Listings (September
2024)**
|
Share of
Affordable
Listings (May 2024)**
|
|
United
States
|
27.2 %
|
27.7 %
|
22.7 %
|
|
New York, NY
|
11.4 %
|
11.6 %
|
10.5 %
|
|
Los Angeles,
CA
|
1.6 %
|
1.9 %
|
1.5 %
|
|
Chicago, IL
|
43.2 %
|
42.3 %
|
35.8 %
|
|
Dallas, TX
|
28.1 %
|
28.9 %
|
20.4 %
|
|
Houston, TX
|
39.6 %
|
40.7 %
|
32.2 %
|
|
Washington,
DC
|
44.3 %
|
44.5 %
|
36.4 %
|
|
Philadelphia,
PA
|
51.2 %
|
51.7 %
|
44.6 %
|
|
Miami, FL
|
23.9 %
|
24.8 %
|
21.0 %
|
|
Atlanta, GA
|
46.0 %
|
47.4 %
|
37.9 %
|
|
Boston, MA
|
11.6 %
|
12.7 %
|
9.3 %
|
|
Phoenix, AZ
|
24.0 %
|
26.0 %
|
18.2 %
|
|
San Francisco,
CA
|
14.0 %
|
15.3 %
|
10.7 %
|
|
Riverside,
CA
|
12.6 %
|
13.2 %
|
9.7 %
|
|
Detroit, MI
|
61.5 %
|
60.7 %
|
56.5 %
|
|
Seattle, WA
|
17.1 %
|
16.7 %
|
12.7 %
|
|
Minneapolis,
MN
|
50.6 %
|
51.0 %
|
40.9 %
|
|
San Diego,
CA
|
4.2 %
|
4.3 %
|
2.7 %
|
|
Tampa, FL
|
26.5 %
|
27.4 %
|
21.3 %
|
|
Denver, CO
|
22.9 %
|
23.0 %
|
17.2 %
|
|
Baltimore,
MD
|
56.2 %
|
56.2 %
|
50.2 %
|
|
St. Louis,
MO
|
64.2 %
|
64.6 %
|
60.2 %
|
|
Orlando, FL
|
22.3 %
|
22.9 %
|
18.0 %
|
|
Charlotte,
NC
|
33.0 %
|
33.9 %
|
26.4 %
|
|
San Antonio,
TX
|
33.1 %
|
34.4 %
|
25.5 %
|
|
Portland, OR
|
18.5 %
|
19.5 %
|
15.2 %
|
|
Sacramento,
CA
|
10.5 %
|
10.6 %
|
6.9 %
|
|
Pittsburgh,
PA
|
72.1 %
|
73.1 %
|
64.4 %
|
|
Cincinnati,
OH
|
53.5 %
|
53.3 %
|
44.9 %
|
|
Austin, TX
|
26.3 %
|
27.0 %
|
17.8 %
|
|
Las Vegas,
NV
|
18.9 %
|
19.6 %
|
17.1 %
|
|
Kansas City,
MO
|
51.2 %
|
50.6 %
|
43.6 %
|
|
Columbus, OH
|
45.4 %
|
45.4 %
|
37.3 %
|
|
Indianapolis,
IN
|
59.5 %
|
60.1 %
|
49.3 %
|
|
Cleveland,
OH
|
57.2 %
|
56.5 %
|
49.7 %
|
|
San Jose, CA
|
7.2 %
|
7.0 %
|
4.1 %
|
|
Nashville,
TN
|
18.6 %
|
20.6 %
|
13.3 %
|
|
Virginia Beach,
VA
|
43.9 %
|
45.3 %
|
36.9 %
|
|
Providence,
RI
|
14.5 %
|
17.5 %
|
12.0 %
|
|
Jacksonville,
FL
|
39.9 %
|
41.0 %
|
31.7 %
|
|
Milwaukee,
WI
|
46.4 %
|
44.8 %
|
39.6 %
|
|
Oklahoma City,
OK
|
42.7 %
|
42.5 %
|
32.7 %
|
|
Raleigh, NC
|
40.3 %
|
42.2 %
|
32.1 %
|
|
Memphis, TN
|
47.7 %
|
48.0 %
|
42.4 %
|
|
Richmond, VA
|
43.1 %
|
44.8 %
|
36.1 %
|
|
Louisville,
KY
|
48.4 %
|
48.4 %
|
41.0 %
|
|
New Orleans,
LA
|
36.9 %
|
38.5 %
|
30.4 %
|
|
Salt Lake City,
UT
|
22.7 %
|
23.9 %
|
14.6 %
|
|
Hartford, CT
|
41.8 %
|
41.3 %
|
36.0 %
|
|
Buffalo, NY
|
63.7 %
|
64.8 %
|
55.7 %
|
|
Birmingham,
AL
|
54.8 %
|
54.7 %
|
48.7 %
|
*Table ordered by market size
**Assuming a median-income household and 20% down
payment
About Zillow Group
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and ZG) is reimagining real estate to make home a reality for more
and more people. As the most visited real estate website in
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#10287 (www.nmlsconsumeraccess.org). © 2024 MFTB Holdco, Inc., a
Zillow affiliate.
1 Average of the weekly 30-year,
fixed-rate mortgage rates during the month, according to the
Freddie Mac Primary Mortgage Market Survey.
2 A household is considered able to
afford a home if the estimated monthly mortgage payment on that
home would cost no more than 30% of household income. The estimated
monthly mortgage payment includes principal and interest only, and
assumes a 20% down payment and a mortgage rate at the monthly
average, according to the Freddie Mac Primary Mortgage Market
Survey.
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SOURCE Zillow
