Research by Zillow revealed a slight improvement in home affordability in the United States. Households with a median annual income of about $86,300, capable of making a 20% down payment, can now afford to purchase a home priced at up to $331,483, an increase of nearly $30,000 compared to last year.
Despite this improvement, the median price of a single-family home remains higher, reaching approximately $400,300 in January, according to data from the National Association of Realtors. The improvement in purchasing power is partly attributed to declining mortgage rates.
The average interest rate on 30-year mortgage loans stood at about 5.99% in late February before rising to 6.14%, compared with 6.79% a year earlier. Experts note that even a half-percentage point drop in interest rates could save homeowners roughly $1,000 annually.
The association also explained that a one-percentage-point decline in mortgage rates could increase the number of households able to buy a home by about 5.5 million, including 1.6 million renters who might then be able to purchase their first home. However, experts warn that stronger demand combined with limited housing supply could push home prices higher again.
