Homebuyer affordability improved in September, due in part to falling mortgage rates and stabilizing home prices, according to ICE Mortgage Technology’s Mortgage Monitor report.
With 30-year mortgage rates averaging 6.26% in mid-September, the monthly principal and interest (P&I) payment on an average-priced home fell to $2,148, or 30% of the median U.S. household income, according to the report.
Although P&I costs are still more than five percentage points above their long-run average, they have declined from 32% earlier this summer and have significantly improved from their 35% peak in late 2023.
Still, the housing market has a long way to go before it gets back to pre-pandemic levels: Listings remain 17% to 19% below 2017–2019 norms, nationally, according to the mortgage technology firm’s data.
As always, conditions vary greatly from market to market: For example, in areas where inventory is increasing, home prices are falling – but at the same time, some sellers are delaying sales to avoid price cuts.
Regionally, the Northeast and Midwest led in annual price gains, fueled by low inventory and stronger affordability.
In September, 80% of markets saw price increases — the highest share in nine months — while only 20% declined, down from 55% two months ago.
Still, nearly half of major markets remain below recent peaks, with 25% over 2% off and 10% more than 5% below their highs.
“The recent pullback in rates has created a tailwind for both homebuyers and existing borrowers,” says Andy Walden, head of mortgage and housing market research at ICE, in the report. “We’re seeing affordability at a 2.5-year high, which is beginning to bolster purchase demand, while creating more opportunities for homeowners to lower their monthly payments with a rate-and-term refinance loan.”
Photo: Dillon Kydd