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.
, /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 |
Share of Affordable |
Share of Affordable |
|
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
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing, and renting experiences.
Zillow Group’s affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Zillow Rentals®, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce®, and Follow Up Boss®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #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.
SOURCE Zillow
