Mortgage rates decreased, home price growth slowed, and housing inventory increased during the past month, leading to improved affordability, according to Zillow’s most recent market report.
“Despite high-cost headwinds, buyers have a few things to be thankful for in today’s market,” says Skylar Olsen, chief economist for Zillow, in a statement. “Home prices are cooling down faster than normal as new listings from existing owners and total inventory slowly recover. Mortgage rates are still above 7 percent, but price cuts are surprisingly common, and mortgage costs eased a bit. These factors favor buyers who are reluctant to pause their home search in the off-season.”
Buyers facing extreme cost challenges received a bit of relief as monthly mortgage costs on a typical home purchase fell 1.5% from October to November.
That’s down from a peak in October, when costs were up 9% annually and almost 120% above pre-pandemic levels.
Affordability improved, too, with mortgage payments, as a share of household income, falling from October’s record high of 40.4% to 38.6% in November.
The monthly decline in costs was primarily driven by falling mortgage rates. But rates still higher than 7% also helped push down home values. The Zillow Home Value Index declined 0.4% from October to November, falling slightly faster than what was previously considered “normal” for this time of year.
Still, the typical national home value is up 2.8% from last year and now stands at $347,415.
As far as inventory goes, positive momentum over the past few months has cut the shortfall from 35% in April to just 14% in November.
Still, new listings fell 20.5% month over month — a much smaller drop than normal for November.
Photo: Allen Taylor