Key Details:
- According to a new Realtor.com report, falling mortgage rates have increased homebuyers’ purchasing power by $74,000 nationwide compared to October 2023.
- With rates dropping to 6.2%, buyers in high-priced metros like San Jose and Los Angeles gained over $200,000 in additional buying power.
Compared to October 2023, when mortgage rates hit a multi-decade peak of 7.79%, buyers in August 2024 purchasing a median-priced home gained $74,000 in purchasing power.
That’s according to a new Realtor.com report on the impact of falling mortgage rates on buying power.
The typical mortgage payment for a median-priced home at the national level was about $2,100 in August 2024, assuming a 20% down payment and today’s 6.2% mortgage rate—assuming a 20% down payment.
That $2,100 monthly figure represents a $300 improvement from May 2024 and a $340 improvement from October 2023.
National and Metro-Level Impact of Lower Rates
The most recent peak in mortgage rates came in May 2024 when rates climbed to 7.22%. As of last week, the weekly average fell to 6.20%, falling a little more than one percentage point to the lowest level since February 2023.
Compared to last October’s peak, rates have fallen more than 1.5 percentage points. And that drop has significantly improved buying power at the national level.
In higher-priced metros, buyers have gained even more.
10 Metros with the biggest improvements in buying power:
- San Jose, CA — Monthly payments dropped from $7,900 in October 2023 to $6,900 in August 2024, with a $240,600 increase in buying power.
- Los Angeles, CA — Monthly payments dropped from $6,700 in October 2023 to $5,800 in August 2024, with a $201,900 increase in buying power.
- San Francisco, CA — Monthly payments dropped from $6,300 in October 2023 to $4,700 in August 2024, with a $191,300 increase in buying power.
- Oxnard, CA — Monthly payments dropped from $6,000 in October 2023 to $5,100 in August 2024, with a $182,900 increase in buying power.
- San Diego, CA — Monthly payments dropped from $5,700 in October 2023 to $4,900 in August 2024, with a $174,100 increase in buying power.
- Bridgeport, CT — Monthly payments dropped from $5,100 in October 2023 to $3,900 in August 2024, with a $154,900 increase in buying power.
- Boston, MA — Monthly payments dropped from $4,800 in October 2023 to $4,100 in August 2024, with a $145,900 increase in buying power.
- Urban Honolulu, HI — Monthly payments dropped from $4,600 in October 2023 to $3,600 in August 2024, with a $139,200 increase in buying power.
- Seattle, WA — Monthly payments dropped from $4,600 in October 2023 to $3,800 in August 2024, with a $138,000 increase in buying power.
- New York, NY — Monthly payments dropped from $4,200 in October 2023 to $3,700 in August 2024, with a $127,100 in buying power.
Future Buying Power Predictions
If the 30-year fixed falls to 6%, the typical buyer could gain an extra $9,000 in purchasing power compared to the 6.2% rate.
If rates drop to 5.5%, buyers financing the purchase of a median-priced home could gain an additional $33,800 in buying power nationwide compared to August 2024.
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Read the full report for more information, including metro-level data and methodology.
