Mortgage rate drops, more inventory may give homebuyers 'window of opportunity' this fall

SEATTLE - Lower mortgage rates and rising inventory could give potential homebuyers a "window of opportunity" in the offseason, according to Zillow. 

Zillow on Thursday said affordability has "improved substantially" for people looking to buy a home. It added that competition among them could extend into the fall rather than fading away, which typically occurs at this time of year. 

"Late summer may be an opportunity for buyers who have been waiting in the wings for a monthly mortgage payment they can qualify for," Skylar Olsen, Zillow’s chief economist, said in a statement. 

"Buyers have more options to choose from for two reasons," Olsen continued. "For one, it's easier to qualify for more of the homes on the market now that mortgage rates are a bit lower. Beyond that, more inventory is becoming available — enough to improve buyer negotiating power."

Attractive properties in desirable markets are still selling quickly, according to Olsen. But some U.S. metros, and certain neighborhoods within them, "have flipped further in favor of buyers."

Mortgage rate declines making buying more affordable again

Mortgage rate declines are helping to make home buying "roughly affordable again" at the national level, Zillow said – noting that this means monthly payments generally take less than one-third of a median household income. This also assumes a buyer puts 20% down on the home and before taxes and insurance are accounted for. 

For the week ending Sept. 5, rates averaged 6.47% for 30-year fixed loans, according to Bankrate’s lender survey. Thirty-year mortgage rates haven’t been this low since April 2023, the company said. 

Nationally, the monthly payment on a typical home purchase has fallen by more than $100 since a peak in May, according to Zillow.

Beyond lower costs, Zillow said a number of other metrics "are moving in buyers' favor," including the fact that homes are taking longer to sell. Homes that sold in August took 20 days to go pending, which is two more than in July, according to the company. 

Map: Here's how long it takes to sell a house in your state

While inventory growth has slowed, nearly 1.18 million homes are on the market, more than any month since September 2020, Zillow said.

"Lower rates could stall or slow a normal autumn cooldown, because right now buyers are more likely to be motivated by lower rates than sellers are," the company stated. 

What are the opportunities for buyers in fall 2024?

• Zillow noted how lower mortgage rates mean improved housing affordability. "Purchasing power is greater, and buying a house may now fit into buyers' monthly budgets," the platform said.
• Homes are also taking longer to sell, which gives buyers more time to decide and more leverage in their negotiations.
• Meanwhile, inventory continues to slowly recover from a years-long shortfall, according to Zillow. This also gives buyers more options.

What are the opportunities for sellers in fall 2024?

• When it comes to selling, people are still doing it "relatively quickly," according to Zillow. Well-priced and well-marketed homes are selling in 20 days, on average, which is almost a week faster than at that time of year before the pandemic, the company added.
• Lower mortgage rates could also raise buyer competition in the fall, and the share of homes with a price cut dropped in August, Zillow said.
• One-third of U.S. homes that sold in July — the most recent data available — went for more than asking price, according to the company.
• Meanwhile, 70% of sellers turn around and buy, and the benefits to buyers stated above apply to their next home.