Homebuyers Boost Purchasing Power by Over $30,000 Thanks to Lower Mortgage Rates
The Corcoran Group broker Noble Black joins Varney & Co. to discuss homebuilder confidence, mortgage rates, and Congress actions to address the housing crisis.
A new analysis reveals that prospective homebuyers have experienced an increase in purchasing power over the past year, thanks to rising incomes and declining mortgage rates.
According to a report published by Zillow on Monday, a median-income household in the U.S. can now afford a home priced at $331,483 with a 20% down payment. The report highlights that the typical mortgage payment has decreased by 8.4% compared to a year ago, excluding taxes and insurance.
Mortgage rates have dropped from an average of 6.96% in January 2025 to 6.1% last month. This decline, combined with rising incomes, has provided a median-income household with an additional $30,302 in buying power compared to the previous year, according to Zillow.
“A more than $30,000 gain in buying power is significant for households that have been stretched thin by high rates. It can mean the difference between settling and choosing,” stated Kara Ng, senior economist at Zillow.
RENT BECOMING MORE AFFORDABLE FOR MANY AMERICANS AS MARKET STABILIZES
A median-income U.S. household can now comfortably afford a $331,483 home with a 20% down payment, a new Zillow analysis found. (Steve Pfost/Newsday RM via Getty Images)
“That doesn’t suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked,” Ng added.
Zillow’s report indicates that the purchasing power of homebuyers is now at its highest level since March 2022, when mortgage rates were still below 5%. The lowest point for affordability occurred in October 2023, when the median household could afford a home priced at $272,224, as mortgage rates averaged 7.62%—the highest average since 2000.
OHIO GOVERNOR SAYS ENDING PROPERTY TAXES COULD PUSH STATE’S SALES TAX TO 20%
The most recent low point for affordability was October 2023, when the median household could afford a $272,224 home. (David Paul Morris/Bloomberg via Getty Images)
The recent decline in mortgage rates has significantly boosted homebuyers’ purchasing power, particularly in the nation’s most expensive housing markets. Zillow reports that a median-income household in San Jose, California, has gained nearly $74,000 in buying power over the past year, the largest increase among major metropolitan areas.
Buyers in San Francisco experienced a boost of $56,115, followed by those in Washington, D.C. ($48,881), San Diego ($46,505), and Boston ($46,390).
The number of homes affordable for a median-income household has also risen by approximately 82,300 homes compared to last year, with about 447,000 homes listed in January.
US HOME PRICES ARE RISING – BUT THESE FAST-GROWING MARKETS REMAIN AFFORDABLE
The latest dip in mortgage rates provided the biggest boost to homebuyers’ purchasing power in the nation’s most expensive housing markets. (Loren Elliott/Bloomberg via Getty Images)
The 447,000 affordable home listings now account for about 40.3% of total listings, up from 34.8% last year. Markets where home values have declined over the past year are providing even more options for median-income buyers, enhancing purchasing power alongside lower mortgage rates.
Houston has seen the most significant growth in affordable home inventory, with nearly 4,000 more homes available for median-income buyers compared to last year.
Other metros with notable increases in affordable home inventory include Phoenix, which has 3,434 more homes, Dallas with 3,267, Miami with 2,981, and Atlanta with a gain of 2,279, as reported by Zillow. Each of these markets has experienced a decline in home values from the previous year.
The Corcoran Group broker Noble Black joins Varney & Co. to discuss homebuilder confidence, mortgage rates, and Congress actions to address the housing crisis.
A new analysis reveals that prospective homebuyers have experienced an increase in purchasing power over the past year, thanks to rising incomes and declining mortgage rates.
According to a report published by Zillow on Monday, a median-income household in the U.S. can now afford a home priced at $331,483 with a 20% down payment. The report highlights that the typical mortgage payment has decreased by 8.4% compared to a year ago, excluding taxes and insurance.
Mortgage rates have dropped from an average of 6.96% in January 2025 to 6.1% last month. This decline, combined with rising incomes, has provided a median-income household with an additional $30,302 in buying power compared to the previous year, according to Zillow.
“A more than $30,000 gain in buying power is significant for households that have been stretched thin by high rates. It can mean the difference between settling and choosing,” stated Kara Ng, senior economist at Zillow.
RENT BECOMING MORE AFFORDABLE FOR MANY AMERICANS AS MARKET STABILIZES
A median-income U.S. household can now comfortably afford a $331,483 home with a 20% down payment, a new Zillow analysis found. (Steve Pfost/Newsday RM via Getty Images)
“That doesn’t suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked,” Ng added.
Zillow’s report indicates that the purchasing power of homebuyers is now at its highest level since March 2022, when mortgage rates were still below 5%. The lowest point for affordability occurred in October 2023, when the median household could afford a home priced at $272,224, as mortgage rates averaged 7.62%—the highest average since 2000.
OHIO GOVERNOR SAYS ENDING PROPERTY TAXES COULD PUSH STATE’S SALES TAX TO 20%
The most recent low point for affordability was October 2023, when the median household could afford a $272,224 home. (David Paul Morris/Bloomberg via Getty Images)
The recent decline in mortgage rates has significantly boosted homebuyers’ purchasing power, particularly in the nation’s most expensive housing markets. Zillow reports that a median-income household in San Jose, California, has gained nearly $74,000 in buying power over the past year, the largest increase among major metropolitan areas.
Buyers in San Francisco experienced a boost of $56,115, followed by those in Washington, D.C. ($48,881), San Diego ($46,505), and Boston ($46,390).
The number of homes affordable for a median-income household has also risen by approximately 82,300 homes compared to last year, with about 447,000 homes listed in January.
US HOME PRICES ARE RISING – BUT THESE FAST-GROWING MARKETS REMAIN AFFORDABLE
The latest dip in mortgage rates provided the biggest boost to homebuyers’ purchasing power in the nation’s most expensive housing markets. (Loren Elliott/Bloomberg via Getty Images)
The 447,000 affordable home listings now account for about 40.3% of total listings, up from 34.8% last year. Markets where home values have declined over the past year are providing even more options for median-income buyers, enhancing purchasing power alongside lower mortgage rates.
Houston has seen the most significant growth in affordable home inventory, with nearly 4,000 more homes available for median-income buyers compared to last year.
Other metros with notable increases in affordable home inventory include Phoenix, which has 3,434 more homes, Dallas with 3,267, Miami with 2,981, and Atlanta with a gain of 2,279, as reported by Zillow. Each of these markets has experienced a decline in home values from the previous year.
