Breaking News: Mortgage rates have dipped following a surprisingly soft July jobs report, offering a potential boost to homebuyer affordability. The average 30-year fixed mortgage rate currently sits at 7.08%, down from a peak above 7% in mid-May.
This shift in rates translates to tangible benefits for prospective homeowners. According to Redfin data, a buyer with a fixed monthly mortgage payment of $2,500 can now afford a home priced at $458,750, an increase from the $439,000 home they could have purchased when rates were at their highest in May.
The median-priced U.S. home currently costs around $447,000.With today’s average mortgage rate, the monthly payment is approximately $2,862. In contrast, mid-may’s higher rates would have resulted in a $2,983 monthly payment – a difference of over $100.This calculation assumes a 20% down payment.
The decline in mortgage rates is directly linked to the July jobs report, released Friday, august 4th, 2023, by the U.S. Bureau of Labor Statistics. The report showed the U.S. economy added 187,000 jobs, falling short of the anticipated 200,000. Simultaneously, the unemployment rate rose to 3.5%, prompting speculation that the federal reserve may pause interest rate hikes and possibly implement cuts as early as September.
“This dip in mortgage rates gives house hunters a window of opportunity to buy before summer ends,” stated Daryl Fairweather, redfin’s chief economist. “While housing costs remain elevated, the recent rate decrease enhances purchasing power and improves overall homebuying conditions. Coupled with a growing inventory of homes for sale, serious buyers should consider acting quickly.”
Currently,there are approximately 300,000 more homes listed for sale then there are buyers actively looking to purchase,creating a buyer’s market in many areas. This imbalance provides buyers with leverage to negotiate lower prices and request concessions from sellers, such as assistance with closing costs or home repairs. Though, the gap between supply and demand is narrowing as fewer homeowners are choosing to list their properties, particularly in states like California and Florida where home values have remained relatively stable. According to Redfin,new listings fell 8.4% in the four weeks ending July 30th.
