This new flurry of activity is fueled by declines in the 30-year interest rate, Black Knight added, creating the most affordable housing market since early 2018. And although the average home price swelled by nearly $13,000 from one year earlier, the monthly mortgage payment required to buy that same home was down by 10 percent thanks lower interest rates. As a result, it now requires now requires 20.6 percent of median monthly income to purchase the same home as it did just over a year ago, which Black Knight called the lowest payment-to-income ratio in two years.
“Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10 percent over that same span due to falling interest rates,” said Black Knight Data & Analytics President Ben Graboske. “Put another way, prospective homebuyers can now purchase a home that is $48,000 more expensive than a year ago, while still paying the same in principal and interest. That’s a 16 percent increase in buying power. Recent history at comparable levels of affordability suggest acceleration in home price growth may well continue in the coming months as this increased buying power puts upward pressure on home prices across the country.”