Both homebuyers and sellers are showing up with more interest as lower mortgage rates provide a boost to the housing market’s “last call” before the shopping season winds down, according to Zillow.
Another break in mortgage rates over September brought a flurry of activity, which depending on the path of rates ahead, could continue into October, according to the latest market report from Zillow.
For a buyer who could have afforded the mortgage payment on a typical home in May, mortgage rates falling to a two-year low of 6.08 percent in late September meant a boost of more than $40,000 in buying power over the past four months.
That rate decrease also brought more sellers to the market. As a result, both home sales (-22.2 percent compared with pre-pandemic norms) and new listings (-17 percent) moved closer to their pre-pandemic averages than in recent months, Zillow added.
“September proved the readiness of both buyers and sellers to return when conditions are right. Lower mortgage rates helped more buyers clear the affordability hurdle and gave buyers already in the market more homes to choose from,” Skylar Olsen, Zillow chief economist, said in a release. “The mortgage rate spike after a strong jobs report early this month gave back some of those affordability gains, at least for now. Buyers should be prepared for more ups and downs, which means it’s crucial to have their finances in order and their expert team in place to act quickly, but not rashly, when they find the right house.”
An uptick in activity from both buyers and sellers kept home values more or less in balance. The typical U.S. home value is now just a tick under $361,000, down 0.2 percent from August. Home values have grown 2.4 percent nationally over the past year, the slowest pace of annual growth since last October.
Trends in price cuts and time on market help illustrate the bump in competition felt by buyers in September. The share of listings with a price cut fell to 25.1 percent in September, down from 25.9 percent in August and a nearly two-year high of 26.2 percent in July.
Before the pandemic, the time between a home being listed and having an offer accepted grew by an average of three days from August to September. This year, it was only one day, from 20 days for the median home sold in August to 21 days in September.