At the risk of jinxing it, things are looking up for home buyers. The average rate on a 30-year fixed rate mortgage has dropped for three consecutive months (and counting). Competition has calmed down a bit — and inflation has, too.
And while we’re still technically in a sellers’ market, the inventory of homes for sale in June reached its highest level in more than four years. Hoping to buy in 2024? If you’re well prepared with a budget and a mortgage preapproval, you might not even need to knock on wood. Let’s look at the good news, the challenges and the wild cards that remain for home buyers this year.
Finally, some relief: In the week ending Aug. 15, 30-year mortgage rates dropped to an average 6.28%, their lowest weekly average since February 2023.
That’s welcome news for shoppers who have felt burned by high rates — or maybe even put their house hunt on ice until the cost of borrowing cooled down. Over the past two years, buyers have been at the mercy of mortgage rates’ meteoric rise, holding on as the average 30-year fixed rate climbed from 3% to nearly 7% in 2022. In October 2023, rates topped 8% for the first time since 2000 — a surprise even many top economists didn’t predict.
Higher interest rates make it more expensive to get a mortgage. To put that in perspective: Let’s say you can afford $1,800 per month in principal and interest. At a 7% interest rate, you could afford to borrow $270,600.
But at a 6% interest rate, you could afford to borr.