In recent months, there has been a slight improvement in home affordability for buyers in the housing market. According to data from the Mortgage Bankers Association, the median new mortgage payment decreased to $2,167 in June, which represents a 2.4% decline from the previous month of May. This improvement has been attributed to declining mortgage rates, which have increased purchasing power for potential homebuyers. Edward Seiler, MBA’s associate vice president of housing economics, noted that this improvement has enticed some borrowers back into the housing market.
Promising Indicators for Homebuyers
Lawrence Yun, chief economist and senior vice president of research of the National Association of Realtors, also sees promising signs for homebuyers in the current market. The median loan amount on new applications fell in June, signaling a moderation in home-price growth. Additionally, the slight decrease in mortgage rates has provided relief for buyers, with the 30-year fixed-rate mortgage declining to 6.78% in July. While this improvement is small in the broader context, it has made a difference for buyers in the current market conditions.
Experts suggest that the housing market is starting to tilt more towards buyers, with increased supply and declining rates creating favorable conditions for buyers. Chen Zhao, the economic research lead at Redfin, mentioned that the market is balancing itself out, moving towards a more neutral market. Orphe Divounguy, a senior economist at Zillow, also highlighted that while there is still an affordability challenge, conditions are improving for buyers. More listings are popping up, leading buyers to become more selective in their choices.
Total housing inventory at the end of June saw a 3.1% increase from the previous month and a 23.4% increase from a year ago. This increase in housing supply has resulted in a 4.1-month supply of unsold inventory, up from 3.7 months in May and 3.1 months a year ago. Lawrence Yun pointed out that this increase in inventory is good news for buyers, as they are less likely to face bidding wars. Competition is easing, especially in the Southern markets, where neutrality or buyer-friendly conditions are observed in most major cities.
With more inventory available, sellers are having to adjust their strategies to attract buyers. Some sellers are cutting prices to entice buyers, with about one in four sellers cutting their prices in June. This has led to a record high of 19.8% of homes for sale having a price cut, compared to 14.4% from a year ago. Homebuilders are also adapting to market changes, with 31% of builders cutting prices to boost home sales. This trend indicates that sellers and builders are responding to the current market dynamics by adjusting prices to appeal to buyers.
Amidst these changes, Lawrence Yun emphasizes that the most important thing for buyers is to stay within their budget. With more options available due to increased inventory and price cuts, buyers should carefully consider their financial limits when making purchasing decisions. While market conditions are evolving, buyers can benefit from the current environment by being informed and strategic in their approach.
The state of home affordability in the market is showing positive signs for buyers. With improvements in affordability, an increase in housing inventory, and adjustments from sellers and builders, buyers are presented with favorable conditions in the current market. While challenges still exist, staying within budget and making informed decisions are key for buyers to navigate the evolving housing market landscape.
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