The U.S. housing market faced a prolonged period of disequilibrium following interest rate hikes. While mortgage rates are poised to continue their fall, experts say homebuyers should capitalize now.
The Data: Redfin released a report on Tuesday following a weak July jobs report that sent mortgage rates to relative lows.
The report found homebuyers now have substantially more buying power as mortgage rates fell from 7.15% to 6.35% since the beginning of July. A homebuyer on a $3,000 monthly budget can now afford a $466,000 home, nearly $30,000 higher than it was a month ago.
Average mortgage payments on the median U.S. home have decreased by $200 in just a month.
While mortgage rates will likely continue falling, Redfin Chief Economist Daryl Fairweather warned against waiting too long to purchase a house.
"Mortgage rates are falling further and faster than expected due to last week's soft jobs report and mounting recession fears," Fairweather said.
"For house hunters who have been waiting for rates to fall before they buy a home: Now is the time. Mortgage rates may decline more as the year goes on, but that will invite competition and push home prices higher, likely canceling out the savings from a lower mortgage rate."
Why it Matters: The housing market has suffered from high interest rates and a lack of supply.
In June, the annual income needed to buy the median value house was around $115,000, simply unaffordable for many Americans. The $115,000 sum is roughly $40,000 more than the median household's income of $74,580.
The housing market has particularly been difficult for members of Generation Z.
